2000 (9) TMI 755 - AT - Central Excise

Summary

Issues:
1. Consideration of refund of excess Central Excise duty paid by a company for the removal of Molasses to another division within the same company.

Detailed Analysis:

Issue 1:
The main issue for consideration in this appeal is whether the Distillery Division of a company is entitled to a refund of Rs. 13,60,000/- being the excess Central Excise duty paid by the Sugar Factory of the same company at the time of removal of Molasses to the storage tank located in the premises of the Distillery Division. The Sugar Factory and the Distillery Division hold separate Central Excise Registration certificates. The Sugar Factory requested permission to store excess Molasses in the Distillery Unit's Steel Storage Tank due to storage shortage. However, they did not obtain specific permission from the Collector for such storage. The Sugar Factory paid Central Excise duty on the assessable value of Rs. 140/- per quintal at the time of removal, which was the prevailing price for decontrolled Molasses. The Distillery Unit claimed a refund of Rs. 13,59,999/- based on the differential duty after selling the Molasses at a lower price. The Assistant Collector rejected the claim, but the Commissioner (Appeals) allowed it, considering the removal as a transfer and not a sale. The Revenue appealed against this decision.

The impugned order was challenged on the grounds that specific permission was required for duty-free storage of Molasses, the payment made was not under protest, correct duty was paid on the assessable value prevailing at the time of removal, and the subsequent price change could not have retrospective effect. The Revenue argued that the duty was paid correctly, and the sale transaction was completed during the removal period. The respondents contended that the removal was a transfer, not a sale, and thus, the excess duty should be refunded. The Tribunal observed that the respondents did not obtain specific permission for duty-free storage and that the goods were removed under Central Excise invoices, indicating a sale transaction. The Tribunal found that the Invoice claiming the lower price was issued after the goods were already cleared, indicating a refund claim strategy. Therefore, the Tribunal agreed with the Revenue's arguments and allowed the appeal, setting aside the impugned order.

In conclusion, the Tribunal held that the removal of Molasses from the Sugar Factory to the Distillery Unit was a sale transaction, not merely a transfer, as claimed by the respondents. As the goods were cleared under Central Excise invoices and subsequent actions indicated a refund strategy, the Tribunal found in favor of the Revenue, allowing the appeal and setting aside the impugned order.