2001 (11) TMI 195 - AT - Central Excise

Summary

Issues:
1. Liability to pay central excise duty on destroyed molasses without permission.
2. Interpretation of Rule 49(1) of the Central Excise Rules, 1944.
3. Authority to undertake destruction of deteriorated goods.

Analysis:

1. The appellants stored molasses for the crushing season 1981-82 with due permission. Subsequently, they applied for the destruction of deteriorated molasses without obtaining permission from the Central Excise Department. The authorities demanded central excise duty amounting to Rs. 1,32,107.00 on the destroyed molasses. The Assistant Collector confirmed the demand, and the Commissioner (Appeals) rejected the appeal against this order.

2. The appeal before the Appellate Tribunal challenged the order of the Commissioner (Appeals). The appellants argued that the molasses had deteriorated and become unfit for human consumption, justifying their application for destruction under Rule 49. The appellants contended that as the molasses had deteriorated due to natural causes, no duty should be levied. The respondents, however, emphasized that the appellants were not authorized to destroy the molasses without prior permission.

3. The Tribunal considered the submissions and noted that the molasses had indeed deteriorated and become unfit for human consumption due to natural causes. Referring to the proviso in Rule 49(1) of the Central Excise Rules, 1944, the Tribunal held that no duty is liable if goods are lost or destroyed by natural causes. Despite the B-2 Bond executed by the appellants, the Tribunal concluded that no duty was payable on the deteriorated molasses. The Tribunal also acknowledged that the appellants had applied for permission to destroy the molasses, but as no permission was granted and they lacked storage capacity for new molasses, they proceeded with the destruction. Consequently, the Tribunal found no grounds to demand duty from the appellants and allowed the appeal, setting aside the impugned order.

In conclusion, the Tribunal ruled in favor of the appellants, holding that no central excise duty was payable on the destroyed molasses due to natural deterioration, as per Rule 49(1) of the Central Excise Rules, 1944.