1991 (3) TMI 171 - CGOVT - Central Excise

Summary

Issues:
1. Unauthorized transfer of molasses into kutcha pits without permission from the Central Excise Department.
2. Whether the loss of molasses due to flood can be considered as falling under the provisions of remission under Rule 49 of the Central Excise Rules.
3. Interpretation of the term "natural causes" in the context of loss or destruction of goods.

Analysis:
1. The central issue in this case is the unauthorized transfer of molasses by the company into kutcha pits without obtaining permission from the Central Excise Department. The Assistant Collector held that the stock deteriorated due to storing in an insecure and unapproved place, confirming duty payable. However, the Collector (Appeals) set aside this order, stating that as the goods had not been removed from the premises, the duty demand was not justified, citing a previous judgment. The government argued that the transfer was unauthorized and the area being flood-prone, an uncovered pit was not an approved storage place under Rule 47.

2. The question arises whether the loss of molasses due to flood can be considered for remission under Rule 49 of the Central Excise Rules. The company argued that the katcha pits were treated as approved storage premises under certain conditions set by the Central Board of Excise & Customs. However, the government contended that the loss was foreseeable due to storing molasses in roofless tanks beyond capacity and open to elements, leading to rainwater entry. The government emphasized that the absence of proper diligence was evident in shifting molasses to kutcha pits without permission, especially in a flood-prone area.

3. The interpretation of "natural causes" in the context of loss or destruction of goods is crucial. The government highlighted that the onus to prove that the loss occurred due to natural causes lies with the company. Referring to previous judgments, the government argued that loss or destruction should result from factors beyond human control or foreknowledge to qualify for remission. The government concluded that the company could have foreseen the exposure to molasses in a flood-prone area, making remission unavailable. The Collector (Appeals) was criticized for allowing remission solely based on non-removal of goods from the warehouse, which does not automatically indicate loss due to natural causes.

In conclusion, the government set aside the order of the Collector (Appeals) and reinstated the order-in-original of the Assistant Collector, emphasizing the lack of proper diligence in storing molasses and the foreseeability of loss in a flood-prone area.