Customs, Excise and Gold Tribunal - Delhi
M/S. Seksaria Biswan Sugar Factory Ltd. vs C.C.E.,Lucknow on 16 February, 2001
Equivalent citations: 2001(135)ELT1024(TRI-DEL)
ORDER K.K. Bhatia, Member (T)
The appellants manufacture 'V.P. Sugar' falling under Chapter heading 1701.39 & 1703.10 of Central Excise Tariff Act, 1985 and Molasses which is subject to specific rate of duty of Rs. 50/- per Qtl. On 8.8.97, their factory premises was visited by the Central Excise Officers. The stock taking of molasses was conducted and it was observed that each of the Tank No. 3, 4, 5 & 6 held either excess or short quantity of molasses as against the quantity reflected in their stock cards. The excess/shortage noticed in each of these Tank is as follows:
Tank No. Difference: (Qntls) 3 (+) 51.93 4 (-) 252.71 5 (+) 1786.30 6 (-) 419.83
2. Accordingly, the appellants were issued a show cause notice and on hearing the party, the Asst. Commissioner of Central Excise, Sitapur Dn. vide his Order dt. 27.7.99 held that there was overall excess of 1838.3 Qtls. of molasses (in tank No. 3 & 5) and he ordered this to be confiscated under Rule 173-Q read with Rule 226 of Central Excise Rules, 1944. The party was however, given an option to redeem the same on payment of a fine of Rs. 5,000/- He further directed them to clear the same on payment of appropriate duty.
The Asst. Commissioner in his order further held that there was a shortage of 672-54 Qtls. of molasses and confirmed the duty demand of Rs. 33,627.00 on this quantity of molasses. The Asst. Commissioner in his order further imposed a cumulative penalty of Rs. 35,000/- on the party. The party filed an appeal and Commissioner (Appeals), Ghaziabad upheld the order of the Original Authority dismissing the appeal of the party.
3. The present appeal is against the above order of the Commissioner (Appeals). I have heard Shri Kapil Vyas, Advocate for the appellants and Shri A.K. Jain, JDR for the respondents. The ld. Advocate for the appellants has relied upon the following decisions:
(a) M/s. Bajaj Hindustan Ltd. vs. CCE Kanpur - 1994 (72) ELT 710 (Tri.)
(b) M/s. Ghatampur Sugar Co. Ltd. vs. CCE, Kanpur - 1996 (85) ELT 69 (Tri.),
(c) M/s. Shetkari Sahakari Sakhar Karkhana Ltd. vs. CCE, Aurangabad - 1999 (113) ELT 831 (Tri.)
4. In all the above decisions, it is held that it is impossible to have a precise control on molasses on volume basis. This can only be obtained by weighting molasses and that weight obtained through volumetric basis particularly when volume will depend on temperature and steam would not always be accurate. The very fact that excess weight finally determined through actual weighment when the tanks in past were drained and charged to duty would also indicate that ultimately it is actual weighment on which duty is paid that is reliable. It is also observed that volume of molasses varies with the formation of foam in hot weather. The changes depend upon the temperature and decomposition of molasses. The dip method or volumetric method for ascertaining the weight of molasses cannot always be a reliable method. Further relying on the ISI specification for steel tanks for storage of molasses IS. 5521.80, it is held that these specifications clearly indicate that 10% is always provided for foam in working out volume of tanks for storage of molasses.
5. Ld. Advocate for the appellants has further placed reliance on the C.B.E.C. Circular issued under F.No. 261/16 CC/1/30-CX. dt. 6.2.1982, in which, it is directed that the loss of storage of molasses upto 2% may be condoned irrespective of whether Molasses is stored in Kucha pits/tanks or steel/pucca tanks.
6. Following the ratio of the above decisions, relied upon by the appellants, it is held that no case for excess or shortage of molasses is made out against them. Accordingly, their appeal is allowed by setting aside the order passed by the lower authority.
(Announced in the Court)