2001 (2) TMI 235 - AT - Central Excise

Summary

Issues:
1. Discrepancy in molasses quantity during stock taking.
2. Confiscation and duty demand by Asst. Commissioner.
3. Appeal against the order of Commissioner (Appeals).

Analysis:
1. The appellants were manufacturing 'V.P. Sugar' and Molasses under specific duty rates. Central Excise Officers found discrepancies in the quantity of molasses in Tanks 3, 4, 5, and 6 during a visit to the factory premises. Tank 3 had an excess of 51.93 Qntls, Tank 4 had a shortage of 252.71 Qntls, Tank 5 had an excess of 1786.30 Qntls, and Tank 6 had a shortage of 419.83 Qntls.

2. Subsequently, a show cause notice was issued to the appellants, leading to an order by the Asst. Commissioner confiscating the excess molasses in Tanks 3 and 5, with an option for redemption on payment of a fine. Additionally, a duty demand was confirmed on the shortage of molasses, along with a penalty imposed on the party. The Commissioner (Appeals) upheld this order, prompting the party to file an appeal against it.

3. During the appeal, the appellants relied on previous decisions highlighting the challenges of accurately measuring molasses volume. The decisions emphasized the unreliability of volume-based measurements due to factors like temperature variations and the formation of foam. The reliance on ISI specifications for storage tanks further supported the argument that volumetric methods may not always be accurate. Moreover, a CBEC Circular condoning storage losses up to 2% added weight to the appellants' case.

4. Considering the precedents and expert opinions, the appeal tribunal concluded that no substantial case for excess or shortage of molasses was established against the appellants. Therefore, the order passed by the lower authority was set aside, and the appeal of the party was allowed.