2010 (6) TMI 749 - AT - Central Excise

Demand of duty - whether the clearance of 9991.20 MTs of molasses to katcha pits within the factory premises from the steel tanks installed in the factory amounts to removal and whether they are liable to pay the Central Excise duty on the molasses stored in katcha pits?

Summary

Issues:
- Whether storing molasses in katcha pits within the factory premises without declaring in monthly returns violates C.B.E. & C. Circular dated 22-10-1992.
- Whether storing molasses in katcha pits amounts to removal from the factory, leading to duty liability.
- Whether duty, penalty, and interest imposed by the Adjudicating Authority are justified.
- Whether the duty liability arises only upon clearance from the manufacturing place as per Rule 4 of the Central Excise Rules, 2002.

Analysis:
1. The appeal challenged the Order-in-original regarding the storage of molasses in katcha pits without declaring details in monthly returns. The lower authorities viewed this as a violation of conditions per C.B.E. & C. Circular dated 22-10-1992, leading to duty liability on the appellant.

2. The appellant contended that molasses were stored within the factory premises and not cleared to any buyer. They argued that duty was paid on clearances made from the katcha pit. The Adjudicating Authority, however, confirmed the duty demand, interest, and penalties, leading to the appeal.

3. The appellant argued that the duty liability should only arise upon clearance from the manufacturing place, citing Rule 4 of the Central Excise Rules, 2002. They referenced previous judgments to support their case, emphasizing proper accounting and disclosure to revenue authorities.

4. The respondent highlighted that the appellant did not seek permission or execute a bond for the duty amount on molasses stored in katcha pits. They supported the Adjudicating Authority's decision on duty liability, penalties, and interest.

5. The Tribunal analyzed the case and found that duty liability only arises upon clearance from the factory premises, as per Rule 4 of the Central Excise Rules, 2002. Since the appellant had cleared a portion of the stored molasses on payment of duty, the demand for duty on the entire quantity stored in katcha pits was deemed incorrect.

6. Consequently, the Tribunal held that the duty liability imposed by the Adjudicating Authority was unsustainable and set aside the impugned order, allowing the appeal. The decision was based on the clear provisions of Rule 4 and the incorrect assessment of duty on the stored molasses within the factory premises.