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1994 (7) TMI 149 - AT - Central Excise
Issues:
1. Demand of duty on drained molasses without payment and imposition of penalty for contravention of Central Excise Rules. Analysis: The appeal before the Appellate Tribunal arose from an order confirming a demand of Rs. 30,491.68 on 4839.95 quintals of molasses drained out without payment of duty, with an additional penalty imposed for contravention of Central Excise Rules. The appellants had manufactured a total of 25657.76 quintals of molasses during the 1985-86 year, out of which 21,224.35 quintals were lifted after payment of duty. The remaining 4389.95 quintals were stored in Kutchha pit No. 3. Despite efforts to dispose of this quantity, including seeking permission from various authorities, the molasses deteriorated over time and became unfit for consumption and marketing. The State Excise Commissioner and Controller of Molasses granted permission to drain out the molasses, which was done on 15-11-1988. However, no orders were passed on the applications for remission of duty and permission to drain out, leading to the issuance of a show cause notice proposing duty recovery and penalty. The Tribunal noted that there was no dispute regarding the molasses being unfit for consumption and marketing, and they were actually drained out. Referring to previous decisions, it was established that molasses not fit for consumption and marketing are not liable for duty. The Tribunal cited precedents to support the view that duty is only collectible at the time of removal of goods, and loss or deterioration due to natural causes does not constitute removal. Consequently, the demand for duty was deemed unsustainable, and the penalty was considered unwarranted. The appellants had applied for permission to drain out the molasses, indicating compliance with relevant provisions despite the lack of response from the Department. As a result, the impugned order was set aside, and the appeal was allowed with any consequential relief due to the appellants, while the Cross-objection abated.
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