1994 (3) TMI 195 - AT - Central Excise

Summary

Issues:
1. Rejection of application for remission of excise duty on burnt molasses.
2. Demand of duty on molasses cleared under protest due to auto-combustion.
3. Appeal against the confirmation of demand by the Collector (Appeals).
4. Additional grounds raised by the appellants regarding the auto combustion incident.
5. Contention of the appellants regarding taking preventive measures against auto combustion.

Analysis:
1. The appellants, manufacturers of V.P. sugar and molasses, reported the burning of 5047.045 MTs of molasses due to auto combustion and applied for remission of excise duty on the damaged molasses. The Collector of Central Excise rejected the remission application, stating that the burnt molasses were not unfit for consumption and were sold to a contractor for use in brick kilns. The appeal was filed against this rejection.

2. The appellants cleared 3737.720 MTs of molasses on payment of duty under protest and showed the remaining 1309.325 MTs as a shortage due to auto-combustion. A demand was issued, which was confirmed by the Assistant Collector, alleging insufficient precautions by the appellants. An appeal was filed against this confirmation by the Collector (Appeals).

3. The Tribunal considered the additional grounds raised by the appellants regarding the auto combustion incident, including seeking permission for removal of remnant molasses and supervision by Excise authorities. The Tribunal allowed these grounds to be incorporated in the appeals.

4. The correspondence between the appellants and the Department demonstrated that the appellants took various preventive measures to combat auto combustion, such as circulating cold water, spraying anti-foam chemicals, and returning hot molasses to the storage tank. The Tribunal noted that the burnt molasses sold to the contractor were waste, not suitable for consumption as molasses, and that auto combustion is a natural phenomenon in molasses. As the appellants proved they acted prudently and took reasonable steps to prevent and mitigate the loss, the duty demand was set aside, and the appeals were allowed.

5. The Tribunal emphasized that unless the Department could establish negligence or delay on the part of the appellants leading to auto combustion, the duty demand could not be upheld. Since the appellants demonstrated their proactive measures and the uncontested nature of the loss, the Tribunal ruled in favor of the appellants, dismissing the Department's cross objections.