1997 (3) TMI 270 - AT - Central Excise

Summary

Issues:
1. Correct method for measuring quantity of molasses in factory's tanks.
2. Validity of confiscation of excess molasses and imposition of penalty.
3. Interpretation of instructions issued by the Excise Commissioner for computation of molasses weight.
4. Applicability of circular dated 27-12-1991 on weight calculation.
5. Consideration of natural phenomena like froth/foam and CO2 gas in molasses.

Analysis:
1. The case involved a dispute regarding the correct method for measuring the quantity of molasses in the factory's tanks. The Additional Collector held that the dip reading method used by the officers was appropriate. The appellants contested this, arguing that physical weighment was the only accurate method. They claimed that the dip reading method was flawed due to variations in molasses properties beyond their control. The Tribunal noted that while the dip reading method had defects, it was the accepted method during the relevant period for calculating molasses quantity.

2. The Central Excise Officers found an excess of 4492.30 Qtls. of molasses during a physical verification, leading to confiscation and a penalty. The appellants argued that the excess was not specifically explained and that the method of dip reading was unreliable. The Tribunal upheld the confiscation, stating that the dip reading method, though imperfect, was the standard practice at the time of verification.

3. The appellants referenced instructions issued by the Excise Commissioner for computing molasses weight. The Tribunal examined Circular No. 13517/Dus-Sheera Needhi/83/91, dated 27-12-1991, which outlined a different method for weight computation. However, the Tribunal ruled that this circular was effective only from its date of issuance and not retroactively applicable to the case's verification on 1-5-1991.

4. The Tribunal considered the applicability of the circular dated 27-12-1991 to determine the correct weight of molasses in the tanks. It concluded that the circular's provisions were not applicable to the case due to the verification date being prior to the circular's effective date. The Tribunal emphasized the importance of using the correct method for calculating molasses weight based on the relevant guidelines in force at the time of verification.

5. The Tribunal addressed the presence of froth/foam and CO2 gas in molasses due to natural fermentation processes. It noted that allowance for foam had been given to the appellants and recognized the natural occurrence of froth/foam during fermentation. The Tribunal concluded that the presence of CO2 gas causing froth/foam was a natural phenomenon affecting the Brix of molasses, supporting the decision to uphold the confiscation based on the findings and considerations of natural processes in molasses production.