TMI Blog1962 (3) TMI 75X X X X Extracts X X X X X X X X Extracts X X X X ..... al Government and the two tribunals below as well as the directions requiring the appellant to pay the additional excise duty of Rs. 90,921-14-0 on 11,606 maunds of sugar and fine of Rs. 2,000. If the appellant has paid the duty and the penalty it should be refunded. - Civil Appeal No. 596 of 1960 - - - Dated:- 28-3-1962 - B.P. Sinha and K. Subba Rao, N.R. Iyenger, R. Modholkar, T.L.V. Aiyer, JJ. JUDGMENT This is an appeal by special leave from the Order of the Government of India, Ministry of Finance (Department of Revenue), rejecting the appellant s application preferred under Section 36 of the Central Excises and Salt Act, 1944 (1 of 1944). 2. The appellant is a public limited company and has been carrying on the business inter alia of manufacturing sugar from sugarcane since the year 1933 at its factory situated at Hargaon in the State of Uttar Pradesh. In May, 1957 and Assistant Chemical Examiner inspected the factory and made a report to the Government to the effect that the appellant had not kept correct accounts of the amount of mixed juice which went into the production of sugar, as required by Rule 83 of the Rules framed under the Act taken along with the Form ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r arrangement which have markings on their beams. The persons incharge of the operation adjust each beam at a certain mark. A movable indicator is also fitted on to the tanks which begins to move up as more and more juice finds its way in the tank. When that indicator comes up to the fixed mark on the beam, the persons in-charge of the operation immediately stop the further in flow of mixed juice. The gross weight of the tank with its content of mixed juice when the fixed mark is reached is 7.5 tons. The tare weight of the tank being known, the actual weight of mixed juice is ascertained by deducting the tare weight from 7.5 tons. The mixed juice is then introduced into the manufacturing process where it is clarified, the water is evaporated and, eventually, sugar crystals are formed. The by-products obtained during this process are press cakes and molasses. 4. The entire operation is thus carried out in a closed system and the quantity of the sugar as well as of the by-products is known. The percentage of sugar in sugarcane, mixed juice, filter cake and molasses is determined. In spite of this, a certain amount of sugar remains undetermined. That is a well accepted fact and is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls given below :- Weight of cane crushed 4502.04 mds. Net mixed juice %cane Weight of next mixed juice by taking the actual gross weight. 4087 mds. 90.78 Weight of next mixed juice by the factory s usual method of taking the gross weight as 7.5 tons per tank 4031 mds. 89.54 Difference 56 mds. 1.24% Thus from the above data, it appears that there is a short accounting of mixed juice per cent cane at least to the extent of 1%. It is clear from the fact that by the time the juice is filled in the tank upto 7.5 tons and the man on duty closes the valve there is a small time gap. However, small this gap may be, it is definite that some extra mixed juice must drop into the tank. It amount will depend upon the flow of mixed juice, the man on duty and his activeness to close the valve, to weigh the tank and to record in the register. Thus, this extra mixed juice is supposed to remain as unaccounted for during the whole season. It is, therefore, certain that the factory has been showing low mixed juice per cent cane throughout this season. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time lag between the emptying of the tanks and starting inflow into them again and so on. It is also unsafe to rely on the average of 10.11% of sugar recovery for the entire period because it involves the assumption that even during the periods when the gross weight of the tanks was 7.5 tons or less sugar content of the sugarcane crushed in the factory was such as could not have been yielded anything less than 10.11%. For, it is well-known that the sugar content of sugarcane even grown in the same area is not constant but is variable according to the time of the year. Again it has to be borne in mind that the recovery of sugar must necessarily depend upon the milling performance. It cannot be assumed that even in an ordinarily well run factory the performance would be uniformly good or uniformly the same. 12. We would also mention one more factor which is mentioned in the letter addressed by the mills to the Resident Inspector on July 27, 1957, replying to the Assistant Chemical Examiner s comment on the working of the factory. In that letter, they have taken exception to the calculations of percentage of mixed juice to the quantity of sugarcane made by the Assistant Chemical Exa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... side was able to throw any light upon it. We would, therefore, not base any conclusion upon it but only observe that this argument was not considered by the Collector or by the Central Board of Revenue or the Central Government. In the circumstances, therefore, we must hold that the finding that 11,606 maunds of sugar were not accounted for by the appellant has been arrived at without any tangible evidence and is based only on inferences involving unwarranted assumptions. The finding is thus vitiated by an error of law. 14. The other finding that the registers were not properly maintained as required by Rule 83 is also an inferential finding based upon the calculations made by the Assistant Chemical Examiner. As we have already held those calculations being based upon unwarranted assumptions cannot form legal basis for a finding that more juice than what was recorded in the register had gone into the production of sugar. 15. It was, however, contended on behalf of the respondent that at the personal hearing given by the Central Board of Revenue, Shri C.M. Dalmia, Assistant Secretary of the Appellant and Shri, J.M. Shah, Superintendent Technologist employed by the Appellant had ..... X X X X Extracts X X X X X X X X Extracts X X X X
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