Custom, Excise & Service Tax Tribunal
M/S. U.P. State Sugar Corpn. Ltd vs Cce, Meerut on 12 March, 2009
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL, WEST BLOCK NO. 2, R.K. PURAM, NEW DELHI COURT III CENTRAL EXCISE APPEAL NO. 111 OF 2007-SM [Arising out of Order-in-Appeal No. 251-CE/APP0L/MRT-I/06 dated 16.11.2006 passed by the Commissioner (Appeals), Customs & Central Excise, Meerut-I, Meerut] For approval and signature: Honble Mr. P.K. Das, Member (Judicial) 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 Departmental authorities? M/s. U.P. State Sugar Corpn. Ltd., Appellant Vs. CCE, Meerut Respondent
Appearance:
Shri Bipin Garg, Advocate, for the appellant;
Shri S. Gautam, D.R. for the Revenue Coram:
Honble Mr. P.K. Das, Member (Judicial), Date of hearing/decision: 12th March, 2009 FINAL ORDER NO._________________ dated __________ Per P.K. Das:
The relevant facts of the case, in brief, are that the appellants are engaged in the manufacture of V.P. Sugar and molasses, classifiable under Chapter 17 of the Schedule to the Central Excise Tariff Act, 1985. On 12.1.2005 the Central Excise Officers visited the appellants factory and verified stock of finished goods. They ascertained excess quantity of molasses of 6782.65 quintals involving central excise duty of Rs. 3,45,913/-. The goods were seized and a show cause notice dated 3.3.2005 was issued asking them to show cause as to why central excise duty amounting to Rs. 3,45,915/- payable on excess stock of molasses should not be demanded under Section 11A of the Central Excise Act, 1944 and penalty should not be imposed under Section 11AC of the said Act, read with Rule 25 of the Central Excise Rules, 2000. The original authority confiscated the goods with an option to redeem the same on payment of redemption fine of Rs. 50,000/- and imposed penalty of Rs. 1 lakh under Rule 25 of the Rules, read with Section 11AC of the Act. The Commissioner (Appeals) modified the adjudication order to the extent of reduction of fine and penalty Rs. 20,000/- and Rs. 50,000/- respectively.
2.1 Learned Advocate submits that there was no proposal of confiscation of the goods in the show cause notice and, therefore, confiscation of goods and imposition of penalty are totally bad in law. He, further, submits that the excess quantity of molasses was found due to foam and, therefore, demand of duty is not justified. He relied upon the following decisions of the Tribunal:-
(a) Ghatampur Sugar Co. Ltd. vs. CCE, Kanpur 1996 (85) ELT 69 (Tribunal);
(b) Kisan Sahkari Chini Mills Ltd. vs. CCE, Ghaziabad 2001 (129) ELT 364 (Tri.-Del.) 2.2 He also submits that the appellant company is a State Government undertaking and they have not removed the goods clandestinely. Therefore, imposition of penalty is not sustainable.
3. Learned D.R. reiterates the findings of the Commissioner (Appeals). He submits that excess quantity was deducted after dip reading method and permissible deduction was given for foam as evident from the adjudication order. He also submits that Rule 25 was invoked in the show cause notice which is sufficient for confiscation of the goods.
4. After hearing both the sides and on perusal of the records, I find that it has been proposed in the show cause notice for demand of duty under Section 11A of the Act and imposition of penalty under Section 11AC of the Act. It is revealed from the show cause notice that the seized goods were released provisionally. It appears that the goods have provisionally released and, therefore, duty would be paid at the time of clearance of the goods. Therefore, demand of duty before clearance of the goods is not justified. I agree with the submission of the learned Advocate that there is no proposal of confiscation of the goods. So, the confiscation of the goods and imposition of redemption fine is not sustainable and, accordingly the same is set aside. The representative of the appellants in his statement stated that excess stock is noticed as there is always foam along with molasses stored in the tank and it depends on many . from time to time and as such exact quantity of molasses cannot be ascertained on the basis of dip reading. It is not disputed about formation of foam in molasses. The Tribunal in the case of Ghatampur Sugar Co. Ltd. (supra) held that formation of foam in molasses admitted by the adjudicating authority Charge of excess molasses not sustainable. In the present case I find that the molasses quantity had already been released and duty is payable at the time of clearance of the goods. I have already held that demand of duty is not sustainable. In any event, it is seen that the original authority had given sufficient allowance for confirmation of foam while ascertaining the stock of molasses. Therefore, there is a contravention of rules. So, imposition of penalty is justified. However, considering the facts and circumstances of the case penalty is reduced to Rs. 10,000/-. Appeal is disposed of in above terms.
(Dictated & pronounced in the Open Court.) (P.K. DAS) MEMBER (JUDICIAL) RK