2003 (3) TMI 220 - AT - Central Excise

Summary

Issues:
Claim for remission of duty on shortage of molasses due to storage loss. Violation of natural justice in rejecting the claim for remission.

Analysis:
1. The appellants, manufacturers of sugar and molasses, detected a shortage of 3591.05 Quintals of molasses in their steel tank No. 2 during the sugar season 1997-98. They applied for remission of duty under Rule 49 of the Central Excise Rules, 1944, attributing the shortage to storage loss, which was rejected by the Commissioner of Central Excise, leading to this appeal.

2. The Chartered Accountant for the appellants cited CBEC Circular No. 261/15/82/CX. 8, stating that storage loss up to 2% in steel tanks could be condoned. The shortage found in the tank included a quantity detected earlier. The appellants argued that the entire shortage was due to natural causes like evaporation, pump/pipeline loss. They referenced previous decisions and a similar case where remission was allowed for a storage loss of less than 2%.

3. The Chartered Accountant contended that the Commissioner violated natural justice by not issuing a show cause notice before rejecting the remission claim.

4. The learned DR argued that the appellants failed to provide evidence of storage loss due to natural causes, supporting the Commissioner's findings and urging for dismissal of the appeal.

5. The Tribunal noted that the shortage was less than 2% of the total production, which could be condoned as per the Board circular. However, it had to be determined if the shortage constituted a "storage loss" under Rule 49. The appellants claimed natural causes for the loss, but the evidence did not support their case.

6. The Tribunal found discrepancies in the appellants' arguments regarding the method of measurement and the unexplained shortage within a short period, questioning the credibility of their claim for storage loss due to natural causes. Lack of substantial evidence of storage loss further weakened their case.

7. The Tribunal distinguished a previous case cited by the appellants, emphasizing the dissimilarity in facts and rejecting its applicability to the present case.

8. Dismissing the plea of violation of natural justice, the Tribunal concluded that the Commissioner's proceedings were not unjust, as previously determined in the remand order.

9. Ultimately, the Tribunal affirmed the impugned order, dismissing the appeal due to the lack of compelling evidence supporting the claim for remission of duty on the shortage of molasses attributed to storage loss.