2017 (10) TMI 261 - AT - Central Excise

Refund of duty liability discharged on molasses in the month of February - the goods on which duty was discharged were not cleared and were destroyed by fire - Rule 4 of the Central Excise Rules, 2002 - Held that - The provisions of Central Excise Act are for discharge of duty liability as soon as the manufacture is complete. In the case in hand, there is no dispute as to the fact that molasses are dutiable item. Provisions of Rule 4 as read by the learned counsel are not for discharging duty liability only when the goods are removed but the duty liability has been postponed/deferred from the manufacturing stage to the clearance activity. There was no necessity for discharging the duty liability by the appellant if the goods are still in the factory premises - appeal dismissed - decided against appellant.

Summary

Issues:
Refund claim rejection for duty paid on molasses destroyed due to fire.

Analysis:
The appeal challenges the rejection of a refund claim for duty paid on molasses destroyed by fire. The appellant cleared 3504 MTs of molasses from the manufacturing unit, paying duty of ?27,06,840. The molasses caught fire in storage tanks, leading to complete destruction. The appellant sought a refund, which was denied by lower authorities. The central issue is whether duty liability should be discharged only upon goods removal from the factory premises, as per Rule 4 of the Central Excise Rules, 2002. The appellant argued that since the molasses were destroyed within the factory premises, duty should be refunded, citing relevant case law. The Tribunal noted that duty liability is to be discharged upon manufacture completion, not just upon goods removal. The appellant's practice of discharging duty even when goods were stored within the factory premises was questioned. The first appellate authority upheld the rejection, citing Section 11B(2)(e) of the Central Excise Act, which does not provide for refund in such circumstances.

The Tribunal found that the appellant's duty liability discharge practice was unnecessary if goods remained within the factory premises. The first appellate authority's findings under Section 11B(2)(e) were deemed correct. The Tribunal highlighted that no rules or notifications under the Central Excise Act supported the appellant's claim for refund. The appellant failed to substantiate their claim further, leading to the rejection of the refund request. The Tribunal distinguished previous case laws cited by the appellant, noting differences in factual positions, such as demand for duty on molasses or seeking remission upon goods destruction. Consequently, the appeal was dismissed, and the Tribunal found no merit in the appellant's arguments.

In conclusion, the Tribunal upheld the rejection of the refund claim for duty paid on molasses destroyed by fire within the factory premises. The appellant's argument based on Rule 4 of the Central Excise Rules, 2002 was deemed insufficient, and no legal provisions supported their claim for refund under Section 11B(2)(e) of the Central Excise Act. The Tribunal found the appellant's duty discharge practice unnecessary and affirmed the first appellate authority's decision. The appeal was rejected on 31/07/2017.