2015 (10) TMI 45 - HC - Central Excise

Denial of refund claim - Refund of supervision charges - Held that - The supervision charges as contemplated under Rule 4(4) of the Rules of 2002 read with the trade notice dated 29.10.2002 is not for the clearance or storage of sugar as and when it happens in the godowns, but, the supervision charges is for the duration of the period when the godown is in the physical control of the respondents where the sugar is stored. - So long as the sugar is stored in godown outside the factory premises the same remains under the physical control of the respondents and the petitioner is required to pay the supervision charges on cost recovery basis. In the instant case, the godown was hired for the period 12.2.2002 to 22.2.2003 and, for this period, the supervision charges @ ₹ 21,532/- per month was required to be paid, which the petitioner had paid. The question of refund, therefore, does not arise. - Decided against assessee.

Summary

Issues:
1. Refund of supervision charges for non-duty paid sugar storage outside factory premises.

Analysis:
The petitioner, engaged in sugar and molasses manufacturing, was granted permission to store non-duty paid sugar outside the factory premises due to storage space constraints, subject to payment of supervision charges. A dispute arose when the petitioner paid the supervision charges under protest and later sought a refund of the excess amount deposited, which was rejected by the authorities. The petitioner contended that supervision charges should only apply for days when storage or clearance of sugar was supervised by excise authorities, not for the entire storage period.

The Court examined the relevant legal provisions, including Rule 4(4) of the Central Excise Rules of 2002 and a trade notice issued in 2002 allowing storage of non-duty paid goods outside factory premises under specific conditions. The trade notice outlined requirements for storage, including physical control by excise authorities, first in first out basis for clearances, no losses permitted, and maintenance of proper accounts, among others.

The Court noted that supervision charges were not solely for the actual storage or clearance activities but for the duration when the godown remained under excise authorities' physical control. Therefore, the petitioner was required to pay supervision charges for the entire storage period, not just for days of actual supervision. As the petitioner had hired the godown for a specific period and paid the supervision charges accordingly, the Court held that no refund was warranted. The Court dismissed the writ petition, stating that the petitioner's contention for a refund lacked merit based on the legal provisions and conditions governing non-duty paid goods storage outside factory premises.