2005 (3) TMI 330 - AT - Central Excise

Summary

Issues: Duty on lost quantity of sugar during reprocessing

Analysis:
The case involved a dispute regarding the duty on the quantity of sugar lost during the reprocessing of Below Indian Sugar Standard (BISS) sugar. The appellants, who were sugar manufacturers, reprocessed 11,751 Qtls. of BISS sugar and obtained 11,029 Qtls. of standard sugar and 749 Qtls. of molasses. The department demanded duty on the lost quantity of sugar during reprocessing, which was 722 Qtls. The appellants argued that they had fully accounted for the BISS sugar taken for reprocessing, and the duty paid on molasses exceeded the duty leviable on the sugar.

The learned Advocate for the appellants contended that the loss of sugar during reprocessing is inevitable and that the standard sugar and molasses obtained were duly cleared after payment of duty. He emphasized that the duty paid on molasses was higher than the duty on sugar, indicating compliance with the regulations. On the other hand, the JDR argued that duty should be imposed on the lost quantity of sugar, as it was not remitted by the appellants.

After considering the arguments from both sides, the Member (T) of the Appellate Tribunal found merit in the appeal. It was observed that during the reprocessing of BISS sugar, some loss of sugar naturally occurs, which is converted into molasses. The Tribunal noted that there was no evidence of non-accountal or illicit clearance of the standard sugar and molasses obtained after reprocessing. Consequently, the Tribunal set aside the order of the Commissioner (Appeals) and allowed the appeal in favor of the appellants.

In conclusion, the judgment clarified that the duty on the lost quantity of sugar during reprocessing was not justified, as the appellants had accounted for the standard sugar and molasses generated from the process. The decision highlighted the standard industry practice of incurring some loss during reprocessing and affirmed that the duty paid on the final products demonstrated compliance with the duty regulations.