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TMI Blog2011 (3) TMI 814X X X X Extracts X X X X X X X X Extracts X X X X ..... their distillery - that the department has failed miserably in proving the case of clandestine production and removal. - Decided in favour of assessee. - E/2008-2011/2001 - A/156-159/2011-WZB/C-II/(EB) - Dated:- 9-3-2011 - S/Shri Ashok Jindal, P.R. Chandrasekharan, JJ. REPRESENTED BY : Shri S.S. Sekhon with Ms. Aparna Hindagi, Advocates, for the Appellants. Shri N.A. Sayyad, JDR, for the Respondent. [Order per : P.R. Chandrasekharan, Member (T)]. - Briefly stated the facts of case are as follows : (a) M/s. Shrigonda Sahakari Sakhar Karkhana Ltd., Ahmednagar ( SSSKL for short) are manufacturers of sugar, molasses, denatured alcohol and fuel oil. The department received intelligence to the effect that M/s. SSSKL were clearing molasses without payment of duty and one of the tanks in which molasses is stored is filled with some black colour liquid instead of molasses. The Superintendent (Preventive) of the Ahmednagar Central Excise Division along with staff visited the factory premises of the said assessee on 11-11-1997. They conducted stock challenge of the molasses stored in the factory premises in the presence of Shri B.M. Nawale, Lab Chemist. It was noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt had allowed the assessee to store 8970 MTs of molasses in the katcha pits during the 1995-96 sugar season. In their statements, both Shri Nawale, Lab Chemist and Shri Gumphekar, Chief Chemist, had admitted that the entries in the accounts books were no correctly recorded and the molasses in the earthern pits were diluted by the rain water. (d) In view of above, the department was of the view that the entire quantity of 8970 MTs stored in the katcha pits and also 3569.300 MTs stored in the steel tank No. 1 had become unfit for consumption. Since the said quantity of 8970 MTs had been shown in the books of accounts as having been used in their distillery for the manufacture of ethyl alcohol the department was of the view that the assessee had produced excess molasses without recording into the books of accounts and utilised the same captively in the manufacture of alcohol without payment of Central Excise duty. As regards the quantity of 3569.300 MTs found in steel tank No. 1, the department was of the view that since the same has been mixed with the molasses stored in katcha pits an equivalent quantity of molasses has been manufactured and utilised in the distillery in the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olasses in the katcha pit. The said quantity was taken for distillation in the distillery vide State excise TP Nos. 364 dated 1-12-1996 to TP Nos. 384 dated 13-2-1997. As regards the quantity of 3569.300 MTs found in steel tank No. 1 they had removed those quantity for distillation under invoice Nos. 18 dated 13-1-2000 to 29 dated 25-2-2000 on payment of appropriate duty of Rs. 500/- per MT and the relevant State excise TP Nos. 18 of 13-1-2000 to 29 of 25-2-2000. Further, in the monthly RT-12 returns molasses stock statements, spirit production statements, etc. were submitted to the department as well as to the State excise authorities and these information is available with the department and, therefore, it cannot be alleged that there has been any clandestine production or removal of molasses. As regards the statement given by Shri B.M. Nawale and Shri D.P. Gumphekar, these statements were recorded under duress after office hours and, therefore, they cannot be relied upon. Further, the statements are in handwriting of Shri Rasne, Superintendent of Central Excise and the said officer had put his words in the statements recorded under duress without supplying the copies of the stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt dated 18-12-1997 shows TRS percentage to be 45.93% as against the department s test report indicating 2.61%. In view of this position it is their contention that there is no evidence whatsoever, relied upon by the department to prove that they have indeed produced and cleared huge quantity of molasses as alleged in the show-cause notice. They have also placed reliance on the following case laws, namely, (1) Oudh Sugar Mills v. Union of India, 1978 (2) E.L.T. J172 (S.C.); (2) LML Limited v. Commissioner of Central Excise, 1991 (51) E.L.T. 434; (3) Leather Chemicals and Industries Ltd. v. Commissioner of Central Excise, Calcutta, 1984 (15) E.L.T. 451; (4) Commissioner of Central Excise, Baroda v. Kosan Metal Products - 1988 (38) E.L.T. 573 (S.C.); (5) Bajaj Hindustan Ltd. v. Commissioner of Central Excise, Kanpur, 1994 (72) E.L.T. 710 and (6) Ashok SSK v. Commissioner of Central Excise, 2000 (117) E.L.T. 708 in support of the above contentions. 4. The department was asked to verify and report whether the assessee had filed RT-8(C) returns dated 6-6-1997 and, if not, what action was taken for non-filing of returns. The jurisdictional range Superintendent has confirmed that on ver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en made against them by the State excise authorities who issued transport permits for the assessee to remove molasses to their distillery. The least that the department could have done in this case is to cross-check with the State excise authorities and the records maintained by them to satisfy, whether, indeed, there has been production and clearance of the molasses to the extent of 12539.300 MTs as made out in the show-cause notice which has not been done in the instant case. Further, molasses has to be produced out of crushing of sugar cane. To produce the quantity of molasses alleged to have been clandestinely produced and removed, the assessee should have procured 3,41,732.115 MTs of sugar cane. Such huge quantity could not have been procured by anyone without documentation relevant to their purchase, transport, payment and so on. No investigation worth the name has been conducted by the department in this regard. Further, as rightly pointed out by the assessee, to crush this much quantity of sugar can the factory should have worked additionally for about 128 days, which means there will be consumption of electricity, other fuels, employment of workers and payment of wages to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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