1996 (6) TMI 219 - AT - Central Excise

Summary

Issues:
1. Whether the appellants are liable to pay duty on the removal of Molasses after obtaining remission on the grounds of being unfit for consumption?
2. Whether the principle of Res judicata applies in this case after the remission of duty was granted?
3. Interpretation of Rule 49 of the Central Excise Rules regarding remission of duty for goods unfit for consumption.
4. Application of previous tribunal decisions in similar cases.

Analysis:
1. The appeal challenged the demand for duty of Rs. 41,270.86 on the removal of Molasses after obtaining remission based on their unfit for consumption status. The appellants argued that the removal was waste for fertilizer use, not as Molasses, hence not liable for duty. The Adjudicating Authority initially dropped the demand, but the Collector (Appeals) later confirmed it.

2. The appellant's advocate contended that once remission of duty is granted, Res judicata applies, citing relevant tribunal decisions. However, the respondent's representative argued that Res judicata does not apply as the goods were removed post remission order. The Tribunal found that Res judicata did not apply as the removal occurred after the remission order, and the representation of Molasses being unfit for consumption was later found incorrect.

3. Rule 49 of the Central Excise Rules allows remission of duty for goods unfit for consumption. The Tribunal analyzed the definition of "consumption" and concluded that Molasses, even if unsuitable for distillation, could still have properties for alternative use like fertilizer, hence not falling under the remission provision.

4. The Tribunal distinguished the facts of previous cases cited by both parties. The decision in Shankar Sugar Mills involved Molasses losing all properties, unlike the current case where Molasses were sold for fertilizer use. The Tribunal referenced the Supreme Court and previous tribunal decisions to uphold that sub-standard goods are still liable for duty, even if not fit for their original purpose.

5. Ultimately, the Tribunal rejected the appeal, finding the duty demand in accordance with the law. The removal of Molasses for fertilizer use still made them liable for duty, and there was no basis to interfere with the duty demand decision.