COMMISSIONER OF C. EX. Vs. KESAR ENTERPRISES LTD.

JUDGEMENT

(1.) BY the captioned appeals, the Revenue has prayed for setting aside the Orders -in -Appeal No. 23 to 25 -CE/LKO/2000 dated 27 -3 -2000 and for restoring the Order -in -Original No. 117/99/DEMAND/MODVAT/29/99 passed by the Asstt. Commissioner.

(2.) THE Assistant Commissioner in the Order -in -original had held that "I hold that the party are required to pay at a rate of 8% of the price of IMFL at the time of its clearance from the factory in terms of Rule 57CC(1). I therefore confirm the demand of Rs. 2,95,860/ - being 8% of the value of IMFL cleared from November, 1998 to December, 1998. As the party did not reverse/pay the said amount which they were required to reverse/pay at the time of clearance of IMFL and continued to wilfully contravene the provisions of Rule 57CC read with Rule 57A, I also impose a penalty of Rs. 2,95,860/ - upon the party. The party are directed to pay the adjudged dues within ten days of receipt of this order failing which in addition to the adjudged dues interest shall also be charged at prevailing rate in terms of provision of Rule 57 -I(3) read with Section 11AB of the Central Excise Act, 1944." The Commissioner (Appeals) in the impugned order concluded that in the light of the above facts and discussion, the case is remanded back to the lower adjudicating authority for arriving at the correct value of rectified spirit, value of which is known at the factory gate sale of the appellants at the time of its clearance for collection of amount at a rate of 8% of value of rectified spirit (ethyl alcohol) and not the value of Indian Made Foreign Liquor and the case be decided accordingly. The appeal is thus disposed of in the above terms.

(3.) THE facts of the case in brief are that the respondents are engaged in the manufacture of sugar. In the course of manufacture of sugar, molasses are produced. From the other unit, they manufacture Ethyl Alcohol, Fusel Oil, Indian Made Foreign Liquor and Country Liquor in their distillery unit. They are availing credit of duty paid on the inputs under the Modvat scheme. It was alleged by the department that the respondents herein have contravened the provisions of Rule 57A and Rule 57CC inasmuch as they had not reversed the amount equal to 8% of the value of IMFL cleared by them from the distillery from November, 1998 to December, 1998. The respondents herein manufacture the country liquor out of molasses allotted to them through permit issued by the Controller of Molasses but IMFL is manufactured out of Molasses procured by them from free sale market/open market. They are storing levy molasses out of which only country liquor is manufactured by them but free sale molasses is neither stored separately for different purposes nor is rectified spirit stored separately according to its final use. The respondents are debiting 8% of the sale value of extra neutral alcohol which is chargeable to nil rate of duty while removing it from the factory but they do not do so in the case of IMFL while removing it from the factory and thus the allegation was that they have contravened the provisions of Rule 57CC of the Central Excise Rules. It was, therefore alleged that the respondents cleared IMFL valued at Rs. 36,98,259 / - during November, 1998 to December, 1998, therefore they were required to pay the amount equal to 8% of price which comes to Rs. 2,95,860/ - under the provisions of Rule 57CC. It was, therefore alleged that this amount was recoverable from them under Rule 57 -I. Accordingly a SCN was issued and the authorities below passed the order as adjudicating authority and the appellate authority as indicated above.