2017 (2) TMI 203 - HC - Central Excise

Application of remission - Wastage of molasses of 10710.50 qtls. due to natural loss/evaporation was less than 2% of the total quantity of molasses 6,15,913.50 qtls - circular letter no. 261/15/82-CD-8 dated 18.7.1983 and Rule 8(4) of U.P. Sheera Niyantran Niyamawali 1974 - Held that - In absence of any such allegation as also any statutory provision providing that the period of a year will not include part of year, if loss is less than two per cent, which has caused due to natural reasons, in our view remission could not have been disallowed allowed to assess - In absence of any law otherwise taking a different view, we are clearly of the view that plain and simple interpretation should be given to Rule 8(4) of Rules, 1974 which permits remission in case loss is less than 2 per cent within the period of a year which includes part of a year also - Decided in favor of the assessee.

Summary

Issues:
- Interpretation of Rule 8(4) of U.P. Sheera Niyantran Niyamwali, 1974 regarding remission application for loss in molasses storage.
- Justification of Tribunal's decision to reject the remission application based on the percentage of loss within a specific period.

Analysis:

1. The appellant's counsel highlighted that the appeal was admitted on two substantial questions of law, but Question (A) was deemed a question of fact. The appellant decided to press only Question (B) for consideration, which revolved around the Tribunal's rejection of the remission application for the loss of molasses stored in a steel tank.

2. The substantial question of law (B) focused on whether the Tribunal was justified in rejecting the remission application without considering that the wastage of molasses was within the allowable limit as per the relevant circular and rule. The appellant argued that the loss was less than 2% of the total quantity stored during a specific period, making it permissible under Rule 8(4) of the Rules, 1974.

3. The appellant contended that the loss in molasses storage during the specified period was below 2%, which was permissible under Rule 8(4) of the Rules, 1974. Despite this, the Revenue authorities and the Tribunal disallowed the remission, citing sudden loss in a short period as the reason for their decision.

4. The Court noted that there was no allegation of abrupt removal of molasses to justify the disallowance of remission for the loss. It was emphasized that any allegations by the Revenue needed to be proven and could not be assumed without evidence. The interpretation of Rule 8(4) was crucial, as it did not specify that a "year" should only refer to a full 12-month period, allowing for remission even within a smaller part of a year.

5. Ultimately, the Court ruled in favor of the Assessee, stating that the Tribunal's decision was not justified. The order dated 04.12.2012 was set aside, and the appeal was allowed based on the interpretation of Rule 8(4) and the permissible limit of loss within a specified period.

6. The judgment clarified the application of Rule 8(4) in the context of remission for loss in molasses storage, emphasizing the need for a plain and simple interpretation of the rule to allow remission even for losses within a part of a year.