2015 (2) TMI 558 - AT - Central Excise

Discharge of duty on molasses - whether excise duty is demandable on molasses removed and stored in earthen pits/masonry tanks. - Held that - There is no dispute on the excisability on the molasses manufactured by the appellant. Once the goods are manufactured, the levy of Central Excise duty cast on the said goods. While manufacturing excisable commodity, it is settled fact that the excisable goods has to be stored only in the approved premises and the storage of goods in the factory varies from commodity to commodity. In case of molasses, it has to be stored only on the steel tanks and not any other places. We find that the Board vide circular dt.1.8.99 has withdrawn permission to store molasses in earthen pits and it has been allowed to store only after payment of duty by following Rule 173H. We find that Rule 49 stipulates that any excisable goods should be kept in a store-room or other place of storage approved by the Commissioner under Rule 47. Excisable goods have been stored not in a manner which is approved by the department. It is also seen that appellants requested for permission to store molasses in earthen pits and masonry tanks and the request has been denied by the jurisdictional authorities. Once the permission has been denied, any deviation/violation by the appellant results in demand of excise duty in terms of Rule 49. The appellant has relied on Tribunal's decision in the case of U.P. State Sugar Corporation Ltd. (1998 (11) TMI 170 - CEGAT, NEW DELHI) whereas the Revenue has relied on the Patna High Court's judgement 2000 (4) TMI 49 - HIGH COURT OF PATNA . When there are decisions by the Tribunal as well as by the Hon'ble High Court, the Hon'ble High Court order will prevail over the Tribunal's decision. - judgement of the Patna High Court has been affirmed by the Hon'ble Supreme Court reported in 2001 (1) TMI 960 - SUPREME COURT . In view of the fact that Hon'ble Supreme Court has upheld the Hon'ble High Court's order, the issue has attained finality. By respectfully following the Hon'ble Supreme Court judgement in Harinagar Sugar Mills Ltd (supra), we hold that appellants are liable to pay excise duty on molasses stored in the earthen pits/masonry tanks. - Decided against assessee.

Summary

Issues:
1. Whether excise duty is demandable on molasses stored in earthen pits/masonry tanks within the factory premises?

Analysis:
The appeal arose from an Order-in-Appeal passed by the Commissioner (Appeals) concerning the duty liability of the appellants for clearing molasses without discharging duty. The central issue was whether excise duty could be demanded on molasses stored in earthen pits/masonry tanks within the factory premises. The appellant argued that duty should only be demanded upon removal of excisable goods from the factory, citing relevant case laws to support their position. On the other hand, the Revenue contended that excisable goods must be stored only in approved locations, and failure to obtain permission for storage in earthen pits led to duty liability as per Rule 49 of the Central Excise Rules. The Tribunal examined the submissions and relevant legal provisions.

The Tribunal noted that the excisability of the molasses was not in dispute, and the levy of excise duty was applicable once the goods were manufactured. It was established that molasses had to be stored in approved premises, specifically steel tanks, as per the Board's circular. Rule 49 mandated that excisable goods should be kept in approved storage places, with duty payable for goods not stored as per regulations. The appellant's request to store molasses in earthen pits was denied, leading to duty liability upon storage deviation. The Tribunal considered conflicting decisions from the Tribunal and the High Court, emphasizing that the High Court's ruling prevails. The judgment of the Hon'ble Patna High Court, upheld by the Supreme Court, clarified that excisable goods must be stored in approved locations to avoid duty liability.

Ultimately, the Tribunal upheld the Commissioner (Appeals)'s decision, holding the appellants liable to pay excise duty on molasses stored in earthen pits/masonry tanks within the factory premises. By following the Supreme Court's judgment in a similar case, the Tribunal concluded that the issue had been settled and dismissed the appeal filed by the appellant. The decision was pronounced in open court on a specific date.

This detailed analysis of the judgment highlights the key legal arguments, precedents, and regulatory provisions considered by the Tribunal in determining the excise duty liability on molasses stored in specific locations within the factory premises.