2001 (7) TMI 216 - AT - Central Excise

Summary

Issues: Duty remission application rejection, duty demand confirmation, penalty imposition under Rule 173Q.

Duty Remission Application Rejection:
The appellants, a sugar manufacturer, filed a remission application under Rule 49 of the Central Excise Rules, 1944, after an auto-combustion incident destroyed a quantity of molasses. The Commissioner rejected the application citing negligence on the part of the unit for storing more molasses than the tank's approved capacity. The Commissioner noted the rise in temperature and lack of sufficient cooling measures by the unit. The Commissioner concluded that the auto-combustion was not due to unavoidable circumstances but negligence by the unit, thus denying the remission application.

Duty Demand Confirmation:
The Commissioner confirmed a duty demand of Rs. 8,63,044.00 and imposed a penalty of Rs. 5 lakhs on the appellants under Rule 173Q. The Commissioner observed that the molasses destruction was due to negligence and not natural causes, as the unit stored more molasses than the tank's capacity and failed to take adequate precautions despite the rising temperature. The Commissioner's order highlighted the unit's responsibility for creating the circumstances leading to the loss, therefore justifying the duty demand and penalty imposition.

Appellate Tribunal Decision:
The Tribunal noted the auto-combustion incident and the rise in temperature leading to the destruction of molasses. The Tribunal referenced previous cases where duty remission was allowed in similar circumstances. The Tribunal questioned the Commissioner's expectation of cooling measures when the rise in temperature was atmospheric. The Tribunal also considered the appellants' explanation regarding the storage of excess molasses in the absence of alternative tanks. The Tribunal found the destruction of molasses beyond the unit's control and unfit for consumption, warranting duty remission. Therefore, the Tribunal allowed the appeal, setting aside the Commissioner's order of duty demand confirmation and penalty imposition.

This detailed analysis covers the issues of duty remission application rejection, duty demand confirmation, and penalty imposition under Rule 173Q, providing a comprehensive overview of the legal judgment by the Appellate Tribunal CEGAT, New Delhi.