K.M. SUGAR MILLS LTD. Vs. CCE

JUDGEMENT

(1.) There is a duty demand of abou Rs. 4.5 lakhs and also a penalty of Rs. 25,000/ -. The case relates to los of molasses due to leakage of tank. Appellant sought remission unde Rule 49(1). The claim has been rejected by the Commissioner on the ground that it was due to negligence of the party (adequate measure were not taken in time for repair of the steel tank) and for that reason, remission is not available. The submission fo the appellant is that upon noticing the leak in time the appellant had taken whatever step was possible to prevent the leak. It is being submitted that loss is on account of natural reason and remission of duty is required to be allowed in respect of molasses so lost. Reliance is also being placed on the decision of the Tribunal in the case of U.P. State Sugar Corporation v. CCE Allahabad . As against this, the learned DR ha brought to my notice the decision of the Tribunal in the case c Balarampur Chinni Mills Ltd. v. CCE, Allahabad 2002 (148) ELT 1172 (T) : 2002 (100) ECR 68 (T) wherein the Tribunal affirmed the order rejecting remission in a case where loss was caused by a lorry c the assessee which hit the storage tank. In the present case, there is no finding that the loss was caused by appellant or its employees. Leakage in the tank'took place without any specific causative action of the appellant or its employees. Therefore, the case of U.P. Stage Sugar Corporation shall apply. The Tribunal observes as under with regard to the claim for remission: 4. It is a fact that, in terms of the first proviso to Rule 49(1) of the Central Excise Rule, 1944, duty is required to be paid by the manufacturer in respect of the goods which are not shown to the satisfaction fo proper officer to have been lost or destroyed by natural causes or by unavoidable accident during handling or storage in such store room or other approved premises. It is an admitted fact that the leakage had occurred in the steel tank. It is also an admitted fact that, the steel tank has been approved by the department for storage of molasses after ensuring that these were safe for storage of molasses. Merely alleging that, the party failed to provide safe and secured storage for molasses and took no pains to prevent leakage, without mentioning as to where the failure was, does not support the case for denying the claim for nonpayment of duty (viz., remission) on this quantity. It is also obvious that, duty can be demanded only when the goods are removed from the factory or consumed as such or removed for manufacture of any other commodity. There is no allegation that, the said molasses have been removed from the factory. The Show -cause Notice admits that, the molasses have leaked into the adjoining kachcha pit. Therefore, molasses are very much there in the factory. It is also not an allegation that, these have been consumed either, 'as such' or 'for manufacture of any other commodity'. Hence the point of demanding duty having not reached, the demand for duty is not sustainable.

(2.) The appellant's case is covered by the aforesaid order of the Tribunal. The appeal is allowed and the impugned order is set aside with consequential relief, if any, to the appellants. (Dictated and pronounced in open Court).