Custom, Excise & Service Tax Tribunal
M/S.Dhampur Sugar Mills Ltd vs Cce, Meerut-Ii on 13 August, 2013
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHI.
Date of hearing/decision:13.08.2013
1.
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982.
2
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3
Whether Their Lordships wish to see the fair copy of the Order?
4
Whether Order is to be circulated to the Departmental authorities?
Excise Appeal No.E/2321/2009-EX (SM)
[(Arising out of Order-in-Appeal No.157-CE/MRT-II/2009 dated 23.4.2009 of the Commissioner of Central Excise (Appeals), Meerut (U.P.)]
M/s.Dhampur Sugar Mills Ltd. Appellants
Vs.
CCE, Meerut-II Respondent
Appearance:Rep. by Shri Alok Arora, Advocate for the appellant.
Rep. by Shri R.K. Verma, AR for the respondent.
Coram : Honble Shri Rakesh Kumar, Member (Technical) Final Order No.57451/2013 /Dated:13.08.2013 Per Rakesh Kumar:
The appellants leading to this appeal are as under:-
1.1 The appellant are manufacturers of sugar and molasses chargeable to central excise duty. The molasses manufactured as by-product in the course of manufacture of sugar is stored in steel tanks. On 2nd May, 1997 at 00.30 hours, in the night, the jurisdictional central excise officers in course of road patrolling in the area of the sugar mill, found three tankers bearing registration no.MKE /91111. DNG/1308 and UP-21/8506 coming from the direction of the appellants sugar mill. Those tankers were stopped and the same were found to be loaded with total quantity of 477 quintals of molasses involving duty of Rs.23,850/-. On enquiry with the drivers, while they produced challans issued by M/s.Suman Trading Company, Dhampur to M/s. Zuhaid Sheera Supply Company, they stated that the molasses in the tankers has been loaded in the factory of the appellant in presence of the representatives of the appellant and of M/s. Zuhaid Sheera Supply Company. The officers immediately visited the appellants factory and checked the stock of molasses stored in steel tanks by dip reading, In respect of stock of molasses, there was excess stock vis-`-vis balance in the RG-I Register. The officers placed 477 quintals of molasses in tankers under seizure on reasonable belief that same had been cleared without payment of duty. Statement of Shri R.S. Pundeer, Manager of the said M/s.Dhampur Sugar Mills Ltd. Dhampur factory was recorded wherein he stated that excess of the stock of molasses may be due to foam formation due to heat and that in their factory, after 30th April, 1997, there was no clearance of molasses.
1.2 Proprietor of M/s. Suman Trading Company, who had issued the challans, was summoned and his statement was recorded wherein he confirmed having supplied the molasses, in question, to M/s. Zuhaid Sheera Supply Company.
1.3 The department, however, was of the view that molasses in the tankers had been illicitly cleared without payment of duty and on this basis, a show cause notice was issued for confiscation of the molasses along with tankers and imposition of penalty on the appellant. The show cause notice also sought confiscation of the excess stock of molasses found in the appellants factory. The show cause notice was adjudicated by the Joint Commissioner, who vide order-in-original dated 7.7.2002 ordered confiscation of the molasses seized from the tankers and also of the excess stock of molasses with option to redeem the same on payment of redemption fine. The tankers from which the molasses had been seized were also ordered to be confiscated with option to be redeemed on payment of redemption fine. Besides this, penalty of Rs.50,000/- was imposed on the appellant and penalty of Rs.2,000/- each on the drivers. This order of the Joint Commissioner was upheld in toto by the Commissioner (Appeals) vide order-in-appeal dated 30.04.2009 against which this appeal has been filed.
2. Heard both the sides.
3. Shri Alok Arora, ld. Counsel for the appellant, pleaded that the only basis of the Departments allegation against the appellant for confiscation of the molasses in tankers is the statements of three drivers, that other than that of statement of the driver, there is no other evidence against the appellant, that no shortage of molasses had been found in the appellants factory, that for excess quantity of molasses, the appellant had explained that same was due to distortion in dip reading due to foam formation in molasses due to heat, that the department has not supplied the statements of tankers drivers and that in view of this, the impugned order confiscating molasses and imposing penalty on the appellant is not sustainable. Shri Alok Arora, Advocate also pleaded that when the appellants plea from the beginning was that the molasses seized from the tankers had not been supplied by the Appellant, but had been supplied by M/s. Suman Trading Co., Dhampur, the department should have taken samples of the molasses from the stock in the factory and from the tankers and should have got the same tested for ascertaining as to whether the molasses seized from the tankers is the same as that which had been manufactured and stored by the Appellant in their factory, but no such testing was done and that just on the basis of the statements of the drivers, it cannot said that the molasses seized from the tankers had come from the appellants factory. He also pleaded that as regards the excess stock of molasses in the appellants factory, for this, the appellant had given a satisfactory explanation and as such, there was no excess of stock of molasses and in this regard, he relies on the judgement of the Tribunal in the case of Bajaj Hindustan Ltd. reported in 1994 (72) ELT 710, wherein it was held that for determining the quantity of molasses stored in tanks, 10% allowance is to be given for foaming. Shri Arora also stated that the molasses is under physical control of State Excise Authorities and as such, no case has been booked by the State Excise Authorities.
4. Shri R.K. Verma, learned Departmental Representative, defended the impugned order by reiterating the findings of the Commissioner (Appeals). He, however, accepted that statements of the drivers relied upon by the department in support of allegation do not appear to have been given for the Appellant. However, he pleaded that from the facts narrated in the show cause notice, it is clear that the tankers in which the seized molasses was being carried, were intercepted while coming out of the Appellants factory. He also emphasized that the excess quantity of 5764 quintals found in the factory clearly shows that the appellant were not correctly accounting for the quantity of molasses manufactured by them and the quantity seized from the tankers had obviously come from excess unaccounted excess stock. With regard to the appellants plea that the excess quantity is within tolerance limit of 10%, he cited the judgement of Honble Allahabad High Court in the case of Kesar Enterprises reported in 2008 (221) ELT 329(A), wherein it was held that shortage in the stock of molasses beyond 2% would have to suffer duty.
5. I have considered the submissions from both the sides and perused the records.
6. On going through the records, I find that the departments case is based on the statements of drivers of the three tankers, who have stated that the quantity of molasses being carried in the tankers had been loaded in the appellants factory in presence of the representative of the appellant and of M/s. Zuhaid Sheera Supply Co. However each of the three drivers was carrying a challan which had been issued by M/s. Suman Trading Company. On enquiry with the proprietor, Shri Umesh Kumar Goel of M/s. Suman Trading Company, Dhampur, he has confirmed the supply of molasses to M/s. Zuhaid Sheera Supply Company, Sambhal. Thus, the only evidence supporting the departments allegation regarding the molasses seized from the tankers having come from the Appellants factory is the statements of the drivers. However, I find that the statements of the drivers have not been supplied to the appellant in spite of directions in this regard having been given by the Tribunal. Since there was no shortage of molasses in the appellants factory and on the contrary, there was excess quantity vis-`-vis the balance recorded in the RG-I register and since no samples from the stock of molasses seized from the tankers and from the stock of the molasses stored in the Appellants factory had been taken and tested, if cannot be said with certainty as to whether the molasses seized from the tankers was same as that which had been manufactured in the appellants factory. In view of this, I find that the departments allegation that the molasses seized from the tankers had been clandestinely cleared by the appellant is not supported by any evidence. As regards excess stock of molasses in the appellants factory, the Appellants plea is that during summer season on account of heat, foam is generated in the tanks because of which the dip reading gets distorted. I am of the view that there is substance in this plea. I also find that it is not disputed that the alleged excess quantity of 5670 qtls. of molasses is well within 10% of the molasses of 1996-1997 sugar season, stored in the tanks, which, in view of the judgement of the Tribunal in the case of Bajaj Hindustan Ltd. (supra) has to be condoned. The judgement of Allahabad High Court in the case of Kesar Enterprises is in respect of storage loss. In view of this, I hold that it cannot be said that there was excess unaccounted stock of molasses in the appellants factory, more so when the molsses is under physical control of the State Excise Authorities and no case had been booked in this regard by them against the appellant. In view of this, the impugned order is not sustainable. The same is set aside. The appeal is allowed.
( Rakesh Kumar ) Member (Technical) Ckp.
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