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TMI Blog1986 (1) TMI 326X X X X Extracts X X X X X X X X Extracts X X X X ..... Dhampur Sugar Mills are engaged in the production of molasses falling under Item 15-CC of the Central Excise Tariff. The department alleged that the respondents removed 13,995.71 qtls., 14,870.92 qtls., 21,605.73 qtls. of molasses during March to June 1983 involving excise duty of Rs. 1,58,987.94 without payment of duty in violation of Rule 49 of Central Excise Rules. This duty was demanded as a result of adjudication order under Section 11-A of the Central Excise Act. The allegations were denied by the respondents before the Assistant Collector. According to them there was overflow of the storage tanks and leakages and, therefore, loss of molasses took place. They were also unable to remove the goods according to their convenience because ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tracted as soon as the commodity comes into existence, no matter what happens to it afterwards, whether it is sold, consumed, destroyed or given away. A reading of Rule 9 and Rule 49 at the Central Excise Rules would show that the duty is payable on all the goods unless it is shown that the goods have been destroyed or had become unfit during storage. He pointed out that the loss of molasses in this case, which was due to overflow and leakage, will not come under the purview of proviso to Rule 49, which covers loss or destruction by natural causes or by unavoidable accident due to handling or storage. He rejected the respondents' plea that the overflow occurred in spite of their efforts and also due to lack of further storage space. In this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was no loss. He emphasized that the disposal of the molasses was under the control of the State Government authorities and not in the hands of the respondents. He further stated that there was no land available with them to construct extra storage tanks. He also sought support from the decision of the Regional Bench of the Tribunal reported in 1984 (16) E.L.T. 658 : Jenson Nicholsen v. Collector of Central Excise. He claimed that the proviso to Rule 49 clearly covers the situation as the respondents have shown that the molasses were lost due to overflow and during storage. There was also qualitative deterioration due to the mixture of rain water with molasses. Replying to the learned consultant, Shri Shishir Kumar contended that the case l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such satisfaction. And let it be clearly observed that the satisfaction required is not about the loss or the destruction having taken place but about the agency that caused the loss or the destruction. There is an inexorability about the agency of a natural cause or an unavoidable accident that one cannot find in a mere common loss or destruction both of which can be caused by human contrariness and human wantonness or, at best, by human negligence. It is not the scheme of the law to grant amnesty for such loss or destruction, but only for loss or destruction brought about by the action of factors over which men have no fore-knowledge or control. The proper officer must satisfy himself that the loss or destruction was effected by causes wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... because the quality of the goods produced had deteriorated it does not follow that the goods cease to become dutiable. Molasses is a specific item in the Central Excise Tariff Schedule and once it is manufactured and comes into existence it becomes chargeable to duty. As observed by the Honourable Supreme Court in the case of Khandelwal Metal & Engg. Works v. Union of India 1985 (20) E.L.T. 222 (S.C.) even sub-standard goods produced during process of manufacture and which may have to be disposed of as rejects or scrap, are yet products of the manufacturing process. Hence, this argument of the appellant is unacceptable.
6. In the circumstances, the orders of the Collector (Appeals) are not sustainable. The appeals are allowed. X X X X Extracts X X X X X X X X Extracts X X X X
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