Custom, Excise & Service Tax Tribunal
Cce, Allahabad vs M/S U.P. State Sugar & Cane Development ... on 23 March, 2011
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No. 2, R.K. Puram, New Delhi 110 066. COURT NO. III Date of Hearing : 23.3.2011 Excise Appeal No. 1502-1503 of 2008-SM [Arising out of the Order-in-Appeal No. 35 & 36-CE/ALLD/2008 dated 28.2.2008 passed by the Commissioner (Appeals), Central Excise, Allahabad] For Approval and signature : Honble Mr. Mathew John, Member (Technical) 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 would 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 : Department Authorities? CCE, Allahabad Appellant Vs. M/s U.P. State Sugar & Cane Development Corpn. Ptd. Respondent
Appearance :
Appeared for Appellant : Shri R.K. Gupta, SDR Appeared for Respondent : Shri Mayank Garg, Advocate Coram: Honble Mr. Mathew John, Member (Technical) Order Nodated.. Per Mathew John:
In these proceedings two appeals filed by Commissioner of Central Excise, Allahabad is being processed. Both are essentially on the same issue viz. remission of duty on storage loss of molasses detected in the factory of the respondent viz. the UP State Sugar Corporation Ltd.
Appeal No. 1502 of 20082. This case relates to loss of molasses during the period Jan. 2003 to 2.12.2003. The duty remitted by the Assistant Commissioner of Central Excise and upheld by the Commissioner (Appeals) is Rs.3,863/- on 7.725 MT of molasses. This loss was actually 1.117% MT of total molasses stored during the period 6.1.03 to 16.4.03 which remained stored up to 2.12.03. The last but one clearance was on 20.11.2003. The last clearance was on 2.12.03 after the last clearance, shortage of 7.725 MT was accounted for. The case of Revenue is that this loss of 7.725 occurred between 20.11.2003 to 2.12.2003 i.e. in 12 days. The Central Board of Excise and Customs had laid down vide CBEC letter No. 261/15CC/8/82-CX.4 dated 18.7.93, a norm that storage losses of molasses is condonable to the extent of 2% of the total quantity stored in an year.
3. The loss was condoned by the Assistant Commissioner of Central Excise. Aggrieved by the order, the department filed an appeal with Commissioner of Central Excise (Appeals) who also upheld the condonation. Now the department is before this Tribunal. The ground given is that 2% loss is to be accounted for for the entire year and in this case the loss has taken place in 12 days. It is argued that the condonable loss should be worked on proportionate basis for 12 days considering the total loss in an year at 2% of quantity stored. It is argued that if loss is calculated in such proportional manner the loss reported is much higher than the loss prescribed and cannot be condoned.
4. The ld. DR reiterated the submissions in the appeal memo. The counsel for the appellant states that loss of molasses in sugar factory in the normal course happens over many days and due to different reasons like evaporation, leakage while transmission to the storage tank and leakage at the time of delivery of the goods and also due to inaccuracy in measurement of the goods. It is submitted by the Counsel that only when sugar season was over that they had taken stock of the loss which occurred during the full year and accounted it in the books of account. It is not as if the 7.725 MT of loss took place in the 12 days.
5. It is argued on behalf of the department that the losses should have occurred due to unavoidable circumstances or totally natural causes and the cause shown by the party cannot be categorised as above and therefore the finding of the adjudicating authority and the decision of Commissioner (Appeals) may be set aside.
6. This appeal is filed without any understanding of the manner in which losses of this commodity occurred and the accounting of molasses in sugar factory. Storage losses is a continuous affair and it something which cannot be completely prevented. The boards circular says that the loss up to 2% of the quantity stored in a year is condonable. The Revenue wants this loss is to be worked out on daily basis and the loss should be ascertained on daily basis and reported to the Central Excise Authorities on daily basis and any failure to do this is described as intention to evade payment of duty. Nothing can be more absurd than this argument.
7. In fact Section 8(4) of the U.P. Sheera Niyantran Adhiniyam, 1964 also provides for 2% loss in a year. This section is reproduced below :-
Occupier of a sugar factory shall take adequate safeguards to see that wastage in the storage of molasses in a year does not exceed two percent of the total quantity stored. In case the wastage exceeds two percent, the occupier shall be liable to penalties imposed under the Act for contravention of the rules: Provided that if it is proved to the satisfaction of the Controller that the wastage or deficiency in excess of the above prescribed limit has been caused by accident or any other unavoidable cause, the occupier shall not be liable to any penalty.
8. This section is to the effect that even in cases of loss above 2%, if it is proved that mistake and deficiency has been caused by accident or any other unavoidable cause the sugar factory was not liable to any penalty. It is the same principle that is sought to be applied in the circular issued by CBEC.
9. The whole concept based on which this appeal is filed contesting condonation of excise duty to the tune of Rs.3,863/- on account of molasses lost while in storage in a factory operated by the UP State Government is misconceived and devoid of any merit and therefore the appeal is rejected.
Appeal No. 1503 of 200810. The facts of this case is very similar except that the period during which molasses was produced was Nov. 99 to March 2001 and the loss was 66.76 MT of molasses which was 1.037% of the total quantity stored in an year and the revenue loss condoned by the lower authorities was Rs. 33,380/-. The reasoning given above in deciding Appeal No. 1502/2008 is equally applicable for this appeal also and this appeal also is dismissed as misconceived and devoid of any merit.
(Pronounced in Court) (MATHEW JOHN) MEMBER (TECHNICAL) RM