1998 (2) TMI 204 - AT - Central Excise

Summary

Issues:
1. Confirmation of Central Excise duty on brown sugar due to alleged loss during processing.
2. Reliance on chemical examiner's report for determining loss percentage.
3. Jurisdiction of the Tribunal to determine dutiability and excisability of brown sugar.
4. Defects in the show cause notice and reliance on the chemical examiner's report.
5. Burden of proof on the Revenue to establish loss due to natural causes.
6. Setting aside the order based on defects in the show cause notice and reliance on the chemical examiner's report.

Analysis:

The appeal concerns the confirmation of Central Excise duty on brown sugar by the Commissioner (Appeals) due to alleged loss during processing, resulting in a shortage of sugar. The appellants contested this, arguing that the loss was primarily due to negligence in storing the sugar. They also challenged the dutiability of brown sugar itself, citing previous judgments. The learned DR defended the order, stating that the loss was calculated from the register and was within the jurisdiction of the Tribunal. However, the learned Counsel argued that the dutiability of brown sugar was in question, extending beyond just the loss during processing.

Upon careful consideration, the Judge overruled the objections on jurisdiction, emphasizing that the issue involved determining the dutiability and excisability of brown sugar, falling under the Tribunal's purview. The Judge also noted the merits in the appellants' arguments, highlighting defects in the show cause notice and the reliance on the chemical examiner's report without proper basis. The Judge emphasized that the burden of proof lay on the Revenue to establish loss due to natural causes and that the duty could not be demanded without sufficient evidence.

The Judge further pointed out that the order was defective as the report of the chemical examiner was not relied upon in the show cause notice, rendering the order beyond its scope. Despite acknowledging this defect, the Commissioner proceeded to confirm the order based on the chemical examiner's observations. Consequently, the Judge concluded that the impugned order should be set aside due to the defects in the notice and the reliance on the report, ultimately allowing the appeal against the duty imposition on brown sugar.