2012 (11) TMI 477 - AT - Central Excise

Demand of duty, interest and penalty alleged that appellants received certain quantity of molasses from the Khandsari Sugar Factory and as per the provisions of Rule 4(2) of the Central Excise Rules, the purchaser is liable to pay Central Excise duty in case of molasses received from Khansari Sugar Factories Held that - If the duty is paid by Khandsari Unit, no demand can be raised against the recipient of the molasses on the ground that there should be no double taxation on the same goods - order is set aside and the appeal is allowed.

Summary

Issues:
- Appeal against demand of Central Excise duty, interest, and penalty on receipt of molasses from a sugar factory.
- Interpretation of Rule 4(2) of the Central Excise Rules regarding liability to pay duty on molasses received from Khandsari Sugar Factories.
- Dispute over whether the molasses received had already suffered duty payment.
- Application of the principle of no double taxation on the same goods.

Analysis:
The appellants contested the demand of Central Excise duty, interest, and penalty amounting to Rs. 4,99,944/-, arguing that the molasses received from M/s. Sarangdhar Sugar Mills Ltd., a manufacturer of various excisable goods including candy sugar, had already been cleared on payment of appropriate duty. They presented the Registration Certificate of M/s. Sarangdhar Sugar Mills Ltd. to demonstrate that excisable goods were being cleared on payment of duty, indicating that the molasses in question had also been subjected to duty payment. The Revenue, however, relied on Rule 4(2) of the Central Excise Rules, 2002, which stipulates that the recipient of molasses from Khandsari Sugar Factories is liable to pay Central Excise duty. The crux of the dispute lay in whether the molasses had indeed suffered duty payment.

Upon examination, it was established that the molasses received by the appellants had already been cleared by M/s. Sarangdhar Sugar Mills Ltd. after paying the requisite duty. The Registration Certificate of M/s. Sarangdhar Sugar Mills Ltd. confirmed their registration for manufacturing candy sugar and other excisable products, all cleared on payment of appropriate duty. This distinction was crucial as Khandsari Sugar Factories are exempt from duty payment, unlike other manufacturers. Citing a precedent set by the Tribunal in a previous case, it was emphasized that if duty had been paid by the manufacturing unit, no additional demand could be raised against the recipient of the molasses to avoid double taxation on the same goods.

In light of the evidence and legal precedents, the Tribunal concluded that the demand for Central Excise duty, interest, and penalty was not sustainable in this case. The impugned order was set aside, and the appeal was allowed, indicating that the appellants were not liable to pay the demanded amount due to the prior duty payment on the molasses by the manufacturing unit.

This comprehensive analysis of the judgment showcases the nuanced legal interpretation and application of relevant rules and precedents in resolving the dispute over Central Excise duty liability on the receipt of molasses from a specific sugar factory.