RAJSHREE SUGARS AND CHEMICALS Vs. CC

JUDGEMENT

(1.) This appeal is directed against the Order -in -Appeal No. 13/2003 (Departmental Appeal) dated 30.4.2003 passed by the Commissioner of Central Excise (Appeals), Madurai by which the Commissioner has set aside the Order -in -Original passed by the Assistant Commissioner and allowed the appeal filed by the Department against the order of Assistant Commissioner wherein the Assistant Commissioner has dropped the proceedings initiated against the appellants vide Show Cause Notice No. OC.412/2000 dated 28.4.2000.

(2.) Brief facts of the case are that the appellants herein are engaged in the manufacture of Sugar, Molasses and different varieties of Ethyl Alcohol. Prior to 5.9.1999, the appellants were having a separate Central Excise Registration Certificate No. 1/92 for the manufacture of Sugar and another Registration Certificate bearing No. 1/94 for the manufacture of denatured Ethyl Alcohol falling under Chapter heading No. 22.04 of the CETA under the caption M/s RSCL, Distillery Division. In terms of the request made by the assessee -appellants for the merger of Distillery Division with Sugar Division, and issue of a single Registration certificate in the place of two registration certificate, permission was granted by the Commissioner vide C. No. IV/16/64/99 T.1 dated 27.8.99 for issue of such certificate and accordingly single Registration Certificate was issued by the Range Supdt. by making necessary endorsement in Registration No. 1/92, incorporating all the commodities manufactured by the appellants. On 6.9.1999 the assessee -appellants vide their letter dated 4.10.99 intimated the Deputy Commissioner of Central Excise, that they had transferred the closing balance as on 30.9.99 available under RG 23A Part II of Distillery Division to RG23A Part II of Sugar Division on 1.10.99 vide Debit entry No. 192 dated 1.10:99 to the tune of Rs. 1,38,69,137. With the merger of both the divisions, the Distillery Division of the appellants ceased to be a separate entity and the endorsement was made in the Registration Certificate in terms of Rule 174 (7). As it appeared to the Department that the appellants (Distillery Division) have wrongly transferred the entire credit amount of Rs. 1,38,69,137 instead of 44,06,511, a show cause notice was issued to them which culminated in the order of adjudication passed by the original authority whereby he dropped the show cause notice. Aggrieved by the said order, the Department preferred appeal before the Commissioner (Appeals) who by the impugned order set aside the Order -in -Original, hence this appeal by the assessee -appellants.

(3.) Shri G. Suresh, Chartered Accountant appearing for the appellants submitted that with the merger of the Distillery Division with the Sugar Division vide endorsement made in the Registration Certificate No. 1/92 on 6.9.199, (sic) the balance in the Modvat Register as on 30.9.1999 available in the Distillery Division was transferred to RG23A Part II of Sugar Division on 1.10.99. He invited our attention to the Board's Circular bearing No. B 42/1 /97 -TRU dated 1st September 97 wherein it was clarified that the credit in respect of any input can be used for payment of duty on any final product without checking whether the input has been utilized in the manufacture of that final product or not. He has also invited our attention to the Trade Notice No. 98 CE 94 dated 28.9.94 wherein it has been clarified that one registration will be required in case where the factory has two different portions located in the adjoining premises. He has further invited our attention to various case laws such as Inox India Ltd. v. Commissioner, 2001 (133) ELT 487, K.M. Sugar Mills Ltd. v. Commissioner, 2001 (133) ELT 567, Kesar Enterprises Ltd. v. CCE, 2003 (155) ELT 100 (Tri. -Del): 2003 (54) RLT 157, AAR AAY Products Pvt. Ltd. v. CCE, 2003 (157) ELT 40 and in the case of Rahul Autotech v. CCE, 2004 (64) RLT 303 in support of his plea allowing the appeal. 3. Smt. R. Bhagyadevi, learned SDR, appearing for the department, referred to the comments received from the Commissionerate vide communication dated 4.11.2004, a copy of which has been placed in the file. It is inter alia stated therein that in the present case, the credit involved in the inputs available and received at the time of amalgamation is allowed; that Molasses is not an input to sugar but a by -product arising during the course of manufacture of sugar. It is also stated that the excess credit was utilized for payment of duty on clearances of sugar. It is further stated that it is evident from the issue that the merging of two different registration in to a single registration is for the purpose of utilising the credit accumulated in the distillery unit, for payment of duty on sugar, albeit the fact that there is no nexus whatsoever between duty paid molaesses and the sugar manufactured. She has also referred to the finding recorded by the lower appellate authority that it is, only the credit relatable to the quantity of molasses transferred to the combined factory that will qualify to come within the mischief of Rule 57F(12). The learned SDR submitted that the lower appellate authority has passed a reasoned order and she prayed for upholding the same.