VISHNU SUGAR MILLS LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) -This writ petition is directed againss an order dated 22nd August, 1986 passed by the Joint Secretary to the Government of India in the Ministry of Finance in the Department of Revenue, purported to be passed in exercise of powers under Section 35 EE of the Central Excise Act, 1944 and also the demand for payment of duty to the extent of Rs. 28 322 78 raised pursuant to the e order dated 22nd August, 1986 on the alleged loss of molasses in the year 1982-83.

(2.) The facts of the case are stated heneunder : The petitioner Company is engaged in manufacturing sugar from sugarcane and producing molasses which is a bye-product of sugar. It is not in dispute that molasses is an excisable commodity under the Central Excise and Salt Act. 1944 (here in after called the said Act).

(3.) During the relevant crushing season of 1987-83 the petitioner Company started crushing operation in its factory on or from 25th November, 1982 and huge quantities of molasses were getting accumlated every day with the result that the General Manager of the petitioner Company by letter dated 3rd December, 1982 wrote to the Controller of Molasses requesting him to send allot meat letters in respect of the molasses to various authorities so that the molasses could be delivered to the allottees in time. As no reply received by the petitioner Company, by its reminders dated 15th January, 1983 and 2nd February. 1983 the petitioner Company further wrote to the Controller of Molasses for the allotment of the same and for making arrangment for lifting of the same. By another letter dated 19th February, 1963 the petitioner Company apprised the Superintendent of Excise, Government of Bihar, Gopalganj about the problem of storage of the molasses Also by a letter dated 31st January, 1983 the petitioner Company applied to the Assistant Collector, Central Excise, Muzaffarpur (respondent No. 3) for permission to store molasses in Ku'cha pits. Such permission to store molasses in Kutcha pits was granted on the petitioner Company execution a bond and a copy of such bond is Annexure-A to the counter affidavit of the respondents. The further case of the petitioner is that as their reminders to the Controller of Molasses to lift the molasses did not produce any result, they filed a writ petition before this Court which was numbered as C. W J C. No 2614 of 1983 for a direction upon the Controller of Molasses and the Excise Commissioner for issuance of a direction to lift the molasses in question. The said writ petition was disposed of on 18th July, 1983 with the necessary direction for lifting of the molasses but the respondents did not choose to take any further action in the matter. On or about 6th June, 1983 the petitioner noticed that the molasses kept in Katcha pit No, 5 as a result of the internal heat, developed a lot of overfoaming. The matter was then brought to the notice of the Superintendent of Central Excise on the same day by a letter dated 6th June, 1983. On the next day i. e. on 7th June, 1983 the Superintendent of Central Excise along with the Inspector visited the factory premises of the petitioner and draw samples of molasses from Katcha pit No. 5 and sent the same for chemical analysis to the Custom House, Calcutta. The test report was never made available to the petitioner Thereafter the Assistant Commissioner of Excise (Distribution) Government of Bihar having regard to the problem which the petitioner was facing in standing the molasses in question gave permission to the petitioner to destory burnt out molasses in his presence. Pursuant to the said direction on 15th December, 1983 9174.85 quintals of molasses stored in Katcha pit No. 5 which, according to the petitioner Company got burnt, was thrown away and destroyed under the supervision of the State Excise authorities but in the absence of the Central Excise authorities As a result of the destruction of the aforesaid quantity of molasses the petitioner asserted that they suffered a loss of Rs 55,049, 10 P. Therafteron 12th January, 1984 & notice was issued by the Superintendent of Central Excise, Gopalganj to the petitioner asking them to show cause why the Central Excise duty amounting to Rs. 30. 601 78 P be not levied on them for the aforesaid destroyed molasses. Pursuant thereto, the petitioner filed a reply to the show cause before the Assistant Collector, Central Excise, Muzaffarpur, inter alia, to the effect that the molasses stored in pit No-5 was destroyed for no fault on the part of the petitioner but as a result of a natural phenomenon However, the explanation given by the petitioner in the show cause was not considered satisfactory end the respondent Assistant Collector by an order dated 14th June, 1984 held that the demand of excise duty to the extent of Rs. 30.601. 78 P. was justified. Against the said order the petitioner Company filed on appeal under Section 35 of the said Act.