2005 (11) TMI 108 - AT - Central Excise

Summary

Issues:
- Quality deterioration of brown sugar due to moisture absorption and non-processing
- Duty liability on lost brown sugar for the period 1978-79 to 1983-84

Analysis:
The case involved a dispute regarding brown sugar's quality deterioration due to moisture absorption and non-processing, leading to a quantity loss for the period 1978-79 to 1983-84. The appellant argued that the quality loss was beyond their control as brown sugar couldn't be re-processed in their factory. They cited a previous Tribunal order in their favor and highlighted their efforts to seek remission of Central Excise duty from the Commissioner, which went unanswered. On the contrary, the Revenue contended that the deterioration was a result of the appellant's negligence in postponing re-processing, emphasizing the appellant's duty to manage their produced goods and discharge any duty liability arising from losses.

Upon reviewing the submissions and records, it was acknowledged that 332.44 qtls. of brown sugar had indeed deteriorated in quality, rendering it unfit for human consumption as confirmed by a certificate from the Public Health Institute. Despite the sugar still being in the factory and entered in the stock record, the duty payment under Rule 49 was questioned. The rule allowed for duty remission in cases of loss or damage by natural causes or unavoidable accidents, subject to the proper officer's satisfaction. In this scenario, where the sugar was available but unsuitable for consumption and re-processing was unfeasible, the duty confirmation against the appellants was deemed unjustified.

Furthermore, the Tribunal noted the appellants' application for duty remission to the Commissioner of Central Excise & Customs, which remained unanswered. This situation, where duty remission was pending while a demand was raised based on alleged negligence, was considered peculiar. Consequently, the Tribunal allowed the appeal, recognizing the unique circumstances and the impracticality of duty confirmation given the sugar's deteriorated state and inability to be re-processed.

In conclusion, the Tribunal's decision to allow the appeal was based on the inability to re-process the unfit brown sugar, the lack of duty remission response, and the unjust nature of confirming duty liability in the given circumstances.