Order date – 22 August 2022

Facts – 

• The Petitioner, The Kisan Sahkari Chini Mills Ltd., is a company registered under the Companies Act and manufactures sugar at District Bahraich and is duly registered under the Central Excise Act.
• At the end of the season it was ascertained that there was a storage loss of 135.37 MT, 169.6 MT and 31.11 MT, which was approximately 1.76%, 1.53% and 1.16 % of the total quantity stored due to an accident.
• The petitioner filed an application on 29.11.2006 claiming remission of duty under Rule 21 of the Central Excise Rules. 
• The petitioner was served with a SCN dated 08.07.2007 rejecting the remission application mainly on the ground that the demand application has been filed only to enjoy the benefit of Board Circular dated 06.02.1982 without following the procedure of intimating the Range Officer within 24 hours mainly on the basis of trade notice. 
• The said notice was issued alleging willful suppression of goods with intent to evade payment of duty and proposes to invoke the extended period of limitation.
• The petitioner filed a reply denying the allegations and informed that the molasses are under the physical control of the State Excise Department and the losses were within the prescribed limit of 2%. 
• Aggrieved by the Orders, the present petition has been filed.

Issue – 

• Whether demand of excise duty with penalty on the petitioner is sustainable?

Order – 

• The Court observed that the Central Excise Authorities should have considered the documents submitted by the petitioner along with his defense reply including the fact that the sugar mill of the petitioner was under the control of the State Authorities and of the Central Excise Authorities. There is no denial of the fact that the remission claimed by the petitioner was within the prescribed limit of 2% for remission of duty.
• The fact with regard to the accident was well within the knowledge of State Authorities and there was no reason for the Central Excise Authorities to have denied the benefit of remission of duty as claimed by the petitioner under Rule 21.
• Also, there is no material to allege or establish that the brown sugar was marketable and once there is no foundation to hold that brown sugar, on which the remission was claimed, was marketable goods, no question of payment of duty arises.
• Also it was held that the claim of the petitioner was well within the prescribed limit of being less than 2%. Thus, there being no material to allege against the petitioner that there was any evasion of duty, the impugned orders were set aside.
• Petition allowed.