Enforcement of B.2 Bond pursuant to CEGAT's Order No. 1116/ 1132/86 WRB dated 14-10-1986 - Central Excise - 35/88-CX.8

Enforcement of B.2 Bond pursuant to CEGAT's Order No. 1116/ 1132/86 WRB dated 14-10-1986 Circular No. 35/88-CX.8 Dated 1-8-1988 [From F. No. 261/12/5/87-CX.8] Government of India Ministry of Finance (Department of Revenue) New Delhi Subject: Enforcement of B.2 Bond pursuant to CEGAT's Order No. 1116/ 1132/86 WRB dated 14-10-1986 . Attention is invited to Board's letter F.No. 261/15CC/4/82-CX.8, dated 22-10-1982 vide which sugar factories were permitted to store molasses in katcha pits/tanks subject to the execution of a bond that in the event of loss or damage, whether for natural causes or otherwise, they would pay duty on such molasses and not claim remission thereon under Rule 49. CEGAT Bombay vide in its order No. 1116/1132/86 WRB, dated 14-10-1986 in an appeal filed by number of sugar factories has upheld the appellants' view that since the molasses stored in katcha pits had deteriorated in quality due to open storage and had been thus rendered unfit for use or marketing, they should be permitted to be destroyed under Rule 49 and duty thereon should be remitted. Board has accepted the CEGAT's decision. Doubts have arise, whether the B.2 bonds executed by the assessees in pursuance of Board's F. No. 261/15CC/4/82-CX.8, dated 22-10-1982 could be enforced in a Court of Law or not. The matter has been examined by the Board in consultation with Law Ministry. It has been opined by Law Ministry that CEGAT in its judgment has left open the question of encashment of Bonds in question. Law Ministry has further observed that the Department is not banned from on cashing the aforesaid bond even by filing a suit in court of Law. Since a substantial amount of revenue is involved, the Board has decided that action should be taken by the Collectors to enforce these bonds ever if need by filing a civil suit in the matter. Board's instructions issued vide F. No. 261/15CC/4/82-CX.B, dated 22-10-1982 are also withdrawn with immediate effect. Thus sugar factories should no longer be permitted to store molasses in katcha pits. This disposes of CCE Aurangabad's F. No. V Chap. 17(8) 1/TE/8723, dated 19th October, 1987.