1986 (1) TMI 326 - AT - Central Excise

Summary

Issues:
1. Alleged removal of molasses without payment of duty in violation of Rule 49 of Central Excise Rules.
2. Interpretation of Rule 49 regarding duty payment on lost or destroyed goods.
3. Whether loss due to overflow and leakage of molasses qualifies for remission of duty under Rule 49.

Analysis:

1. The appeals were filed against the order alleging the removal of molasses without duty payment. The respondents, engaged in molasses production, denied the allegations, citing overflow and leakage as causes of loss. The Assistant Collector demanded duty, which was contested before the Collector (Appeals) Delhi. The Collector (Appeals) held that the loss was beyond the control of the respondents and set aside the duty demand.

2. The appellant-Collector argued that duty is attracted upon the creation of goods, regardless of subsequent events. He emphasized that the loss of molasses due to overflow and leakage does not fall under the proviso to Rule 49, which covers loss by natural causes or unavoidable accidents during handling or storage. The appellant contended that the respondents failed to report the loss promptly and knowingly stored molasses in full tanks, leading to the overflow.

3. The respondents argued that the loss was due to overflow beyond their control, as disposal was managed by State Government authorities. They referenced a Tribunal decision supporting their claim under Rule 49. The Tribunal analyzed Rule 49, emphasizing that loss or destruction must result from factors beyond human control. The overflow and leakage of molasses, caused by storing them in roofless tanks beyond capacity, did not qualify as loss due to natural causes or unavoidable accidents under Rule 49.

4. The Tribunal concluded that the loss of molasses due to overflow and leakage did not meet the criteria under Rule 49 for remission of duty. The duty is attracted upon the creation of goods, and even if the quality deteriorates, the goods remain dutiable. The orders of the Collector (Appeals) were deemed unsustainable, and the appeals were allowed in favor of the appellant-Collector.