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2016 (7) TMI 231 - GOVERNMENT OF INDIA

2016 (7) TMI 231 - GOVERNMENT OF INDIA - TMI - Loss of goods during manufacturing - Procedure of Remission of duty not followed - Rule 21 of Central Excise Rules, 2002 - Cenvat Credit on inputs - On scrutiny of ER-I returns for the month of April 2009 to March2010, it has been observed that the respondent has shown some quantity of Denatured Rectified Spirit as process loss after production of the finished goods. The respondent has not mentioned any reason for this process loss in their ER-I ret .....

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excise duty of goods said to have been lost in natural course, within the permissible limit, as per the circulars, he has to follow the procedure prescribed under Ru/e 21 of the Rules. Only after an order is made granting remission in respect of the goods so lost due to natural circumstances, he could be exempted from payment of excise duty" - Remission of duty on storage losses cannot be claimed by the respondent even when no remission application has been filed by them and it is establishe .....

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Excise, (Appeals), Meerut-l with respect to Order-in-original No. 24/AC/MZN-11/2011 dated 31.0512011 passed by the Assistant Commissioner of Central Excise, Muzaffarnagar-ll against M/S Triveni Engineering & Industries Ltd., Muzaffarnagar(hereinafter referred to as the Respondent) . 2. Brief facts of the case are that the respondent are engaged in the manufacture of Rectified Spirit, Denatured Rectified Spirit, Extra Neutral Alcohol (ENA) and by-product i.e Fusel Oil. The products viz Denat .....

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has shown some quantity of Denatured Rectified Spirit as process loss after production of the finished goods. The respondent has not mentioned any reason for this process loss in their ER-I return. As excise duty is leviable on the manufacture of excisable goods in a factory of manufacturer in terms of Section 3 of the Central Excise Act, 1944, hence all the gods manufactured in the factory are liable for payment of duty except under the circumstances when the party show sufficient reasons that .....

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said goods appear to have been removed from the factory without payment of Central Excise duty. Hence a Show Cause Notice was issued on17.05.2010 to the respondent alleging therein that it appears that the respondent has clandestinely cleared 6137.9 ltr of Denatured Rectified Spirit, shown it as loss in their ER-I return in order to evade Central Excise duty amounting to ₹ 10,092/- which is recoverable under the provisions of Section 11 A of the -Central Excise act, 1944 along with interes .....

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penalty of equivalent amount along with interest. 3. Aggrieved by the said order, the respondent filed appeal before the Commissioner (Appeals), who vide his Order-in-Appeal No. 139/CE/MRT-I/2012 dated 11.02.2012 set aside the Order-in-Original and appeal of the respondent was allowed. 4. The Applicant has now filed this Revision Application under Section 35 EE of Central Excise Act, 1944 before the Central Government mainly on the following grounds: 4.1. That the respondent appealed that the q .....

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t any time before removal, he may remit the duty payable on such goods subject to such condition as may be imposed by him by order in writing." That as per the instructions issued by the Additional Collector, North U.P. Collectorate vide instruction no. 74/89 dated 01.06.1989 for condonation of storage loss for Denatured Rectified Sprit upto 0.5% and letter of CBEC, F.No. 261/15CC/80-CX 8 dated 06.021982 for same, it has been made clear that upto 2% of storage loss of molasses because of na .....

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) has found that the losses reported in the ER-I returns were much below 0.5% placing reliance on the order of Hon'ble Tribunal in the case of Kishan Sahkari Chini Mills Ltd Vs. CCE, Allahabad and he found that no proof or evidence on record to uphold the allegation of clandestine removal or to prove that the goods have been sold without payment of duty. That relying upon the judgment of Hon'ble Tribunal in the case of UP State Sugar Corporation Vs CCE, Meerut 2006(206) ELT 677(Tri-Del) .....

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the statutory requirements, otherwise it will set a precedence on the part of the manufacturer to avail this facility/concession for clandestine removal of the goods without payment of duty. 4.6. That it is also held by the larger Bench of Tribunal in the case of Avis Electronics (P) Ltd. 2000 (117) El-ET. 571 (Tri-LB) that when a particular thing is directed to be performed in a manner prescribed by Rules, it should be performed in that manner itself and not otherwise. 4.7. That the Central Gov .....

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se to which the following submissions have been made: 5.1. That the impugned Order-in-Appeal narrates correctly the facts that the solvents, spirits, alcohol etc are volatile in nature and can evaporate over a period of time. That the percentage of loss was clearly indicated to be less that 0.5%. That the order also narrates factually and correctly that the loss is because of natural causes 'which are attributable to the inherent nature, characteristic of denatured spirit particularly, the n .....

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emand of duty, the same could be treated as sufficient compliance of Rule 21 of Central Excise Rules. 5.3. That the product in dispute being volatile in nature, some losses were bound to occur and that was the reason as to whether the State Excise Officers are recording the losses in the statutory records. That the product is under physical control of State Excise Office, it was not possible for them to remove even a Iitre of Denatured Spirit without accounting the same in the statutory records .....

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ed reliance on the following cases laws: CCE Madurai vs Valan Beedi Works, 2003 (166) ELT 133 (Tri Chennai) Kalvert Foods India vs CCE, Mumbai, 2003 (152) ELT 13 (Tri Del) Emmtex Synthetics Ltd vs CCE, Delhi 2003 (151) ELT 170 (Tri Del) Thiruchengode Velavar Vs CCE, Coimb 2003 (155) ELT 159 (Tri Chennai) CCE Coimbatore vs Sangamitra Cotton 2004 (163) ELT 472 (Tri Chennai) CCE Chennai vs GM Re-rollers 2003 (153) ELT 392 (Tri Chennai) Nav Bharat Papter vs CCE, Delhi 2003 (165) ELT 564 (tri Delhi) .....

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Chaturvedi, Assistant Commissioner, Division -Il, Muzaffarnagar attended the hearing on behalf of the department. 7. Government has carefully gone through the relevant case records available in case files, oral & written submissions and perused the impugned Order-in-Original and Order-in-Appeal. 8. On perusal of records, Government observes that in the instant case on scrutiny of ER-I returns of the respondents for the month of April 2009 to March2010, it has been observed that they have sh .....

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the said goods have been lost or destroyed by natural causes or by unavoidable accident or are claimed by the manufacturer as unfit for consumption or for marketing at any time before removal and claim remission of duty in terms of Rule 21 of Central Excise Rules, 2002. The respondent has neither shown any reason for such loss nor applied for remission of duty as required in terms of Rule 21 of Central Excise Rules, 2002 on the quantity shown to have been lost in the ER-I returns. A Show Cause N .....

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e respondent is liable for penal action under Rule 25 of the Central Excise Rules, 2002 for alleged violation of Rule 4 of the said Rules. The Assistant Commissioner, Muzaffarnagar, Division-Il vide Order-in-Original No.24/AC/MZN-II/201 dated 31.052011 confirmed the demand of Central Excise Duty amounting to ₹ 10,092/- and imposed penalty of equivalent amount along with interest. Aggrieved by the said order, the respondent filed appeal before the Commissioner (Appeals), who vide his Order- .....

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causes or by unavoidable accident or are claimed by the manufacturer as unfit for consumption or for marketing, at anytime before removal, he may remit the duty payable on such goods, subject to such conditions as may be imposed by him in writing". From perusal of above provisions, it becomes clear that remission of duty on lost or destroyed goods may be allowed provided such loss/destruction is caused by natural causes or by unavoidable accident and such causes are to be shown to the satis .....

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moved from the factory until issuance of a pass from State Excise Officers. Further that the State Excise Department allows 0.5% storage loss of Denatured Spirit. But in this case the respondent has failed to place on record any evidence showing that such losses occurred due to any natural cause and instead has merely shown the said losses in their ER-I return only. Any remission can be allowed in terms of Rule 21 ibid. In the present case, Government observes that the respondent has suo moto cl .....

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