TMI Blog2022 (8) TMI 988X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner was under the control of the State Authorities and of the Central Excise Authorities. There is no denial of the fact that the remission claimed by the petitioner was within the prescribed limit of 2% for remission of duty. It is well settled that without there being a foundation to invoke a larger period of limitation as provided in the proviso to Section 11A of the Act, no orders can be passed thereupon. Even otherwise in the present case, the fact with regard to the accident was well within the knowledge of State Authorities and there was no reason for the Central Excise Authorities to have denied the benefit of remission of duty as claimed by the petitioner under Rule 21. That being the case coupled with the fact that there was no specific allegation in the show-cause notice that the assessee had not paid the duty, the orders impugned being order dated 14.10.2011 (Annexure 1), the appellate order as well as the order-in-original are clearly not sustainable and are set aside. It is well settled that central excise duty is payable on manufacture; although the word goods has not been defined under the Act, it is well settled by the Hon ble Supreme Court that f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Excise, Lucknow as well as the order-in-original dated 17.09.2008 passed by Assistant Commissioner, Central Excise Division, Sitapur. (ii) The petitioner claims to be a co-operative sugar mill registered under the Co-operative Societies Act and is engaged in manufacturing of sugar and molasses falling under Central Excise Tariff Heading No.17011190 17031000 of the Central Excise Tariff Act, 1985 and was paying the central excise duty at the time of clearance of the product. It is claimed that the factory remains under the physical control of the State Excise Authorities under the provisions of U.P. Sheera Niyantran Niyamavali, 1974. It is alleged that on 26.05.2007 at 06:00 am in the morning, there was an accident in the factory which resulted in the leakage of the tank where molasses were stored which resulted in the loss of 3240 qntls. of stored molasses. It is claimed that this fact was in the knowledge of the Deputy Excise Inspector of the State Government who is permanently posted in the mill and it is also claimed that the Inspector of Central Excise Department posted in the petitioner-factory also noticed the same accident. Sufficient evidences have been given t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Section 11A read with Section 11-AB of the Central Excise Act. The petitioner submitted a Defense Reply on 19.07.2008 giving his version with regard to the accident being beyond the control of the petitioner. Alongwith the said reply, he also appended a copy of the application filed by him seeking remission in terms of Rule 21 of the Central Excise Rules. He also informed that the entire accident was well within the knowledge of the State Authorities and of the Central Excise Authorities. He also placed reliance on Circular No.261/15/82/CX-VIII dated 18.07.1983 which had allowed remission up to the maximum 2% loss due to natural causes. The petitioner also relied upon various judgments, however, the Assistant Commissioner, Central Excise Division, Sitapur vide order-in-original dated 17.09.2008 confirmed the demand of excise duty of Rs.2,95,095/alongwith interest under Section 11A/11AB of Central Excise Act and further imposed a penalty of this like amount in exercise of powers under Rule 25 of the Central Excise Rules. (vi) The order records that no application as prescribed in the format in the Trade Notice No.29/2003 dated 01.10.2003 has been given by the assessee till tod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , which was informed to the department vide letter dated 08.08.2006. It is further claimed that the petitioner vide letter dated 07.07.2007 informed the department regarding loss of 1081 qntls. of brown sugar during reprocessing of 8996 qntls. of brown sugar. The petitioner was served with a demand-cum-show cause notice dated 21.11.2006 stating that on the scrutiny of the E.R.1 form for the month of November, 2005 to March, 2006, it was found that the petitioner has reprocessed 9632 qntls. of brown sugar and recovered only 8431 qntls. of white sugar, thus, there was a reprocessing loss of 1201 qntls. of brown sugar on which the petitioner neither paid any duty nor claimed any remission of duty under Rule 21 of the Central Excise Rules and thus, the petitioner was called upon to show-cause as to why central excise duty may not be levied and demanded on the 1201 qntls. of brown sugar with interest and penalty. (iv) The petitioner was also served with another demand - cum - show cause notice dated 16.11.2007 alleging that the petitioner had intimated vide letter dated 07.07.2007 that he has reprocessed 9896 qntls. of brown sugar during the year 2006-07 and had recovered 7915 qntls. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) The present petition has been filed challenging the revisional order dated 28.11.2013, the appellate order dated 07.07.2011 as well as the order-in-original dated 30.12.2009. (ii) The petitioner is a company registered under the Companies Act and manufactures sugar at District Bahraich and is duly registered under the Central Excise Act. It is claimed that for the sugar season 2005-06, the petitioner had transferred and stored the following quantities of molasses in steel tank nos.1, 2 3: Tank No. Quantity Stored (MT) Period of storage 1 7705.00 13.12.05 to 04.08.06 2 12877.00 12.11.05 to 28.11.06 3 2671.00 01.04.06 to 07.08.06 (iii) It is claimed that at the end of the season it was ascertained that there was a storage loss of 135.37 MT, 169.6 MT and 31.11 MT, which was approximately 1.76%, 1.53% and 1.16 % of the total quantity stored in the steel tank nos.1, 2 3. The petitioner filed an application on 29.11.2006 claiming remission of duty un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibed at the time of clearance as per Rule 8 of the Central Excise Rules (for short the Rules ). The duty is payable on manufacture which is defined under Section 2F of the Act. Although the word goods has not been defined under the Act, however, the same has been interpreted by the Hon ble Supreme Court in the case of Union of India v. Delhi Cloth and General Mills Co. Ltd. [1977 (1) ELT J 199 (SC)] to define that the article can be called goods if it is known to the market as such and can ordinarily come to the market for being brought and sold or is being capable of being sold. 7. Rule 4 8 of the Rules provides for manner of payment of the central excise duty which is to be paid when the goods are removed from the factory or the warehouse. Rule 4(2) provides for payment of duty in respect of molasses wherein a deeming fiction has been incorporated for payment as if the same has been produced by the procurer of the molasses. Rule 21 of the Rules specifically provides for remission of duty and confers power on the authorities to grant the remission upon them being satisfied that the goods have been lost or destroyed by natural causes or unavoidable accident or are claimed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ehouse during a month shall be paid by the 6th day of the following month, if the duty is paid electronically through internet banking and by the 5th day of the following month, in any other case: Provided that in case of goods removed during the month of March, the duty shall be paid by the 31st day of March: Provided further that where an assessee is eligible to avail of the exemption under a notification based on the value of clearances in a financial year, the duty on goods cleared during a quarter of the financial year shall be paid by the 6th day of the month following that quarter, if the duty is paid electronically through internet banking and in any other case, by the 5th day of the month following that quarter, except in case of goods removed during the last quarter, starting from the 1st day of January and ending on the 31st day of March, for which the duty shall be paid by the 31st day of March. Explanation-1.- For the removal of doubts, it is hereby clarified that. - (a) * * * (b) an assessee, shall be eligible, if his aggregatevalue of clearances of all excisable goods for home consumption in the preceding financial year, computed in the mann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... day after due date till the date of actual payment of the outstanding amount. (3A) If the assessee fails to pay the duty declared as payable by him in the return within a period of one month from the due date, then the assessee is liable to pay the penalty at the rate of one per cent. on such amount of the duty not paid, for each month or part thereof calculated from the due date, for the period during which such failure continues. Explanation. For the purposes of this sub-rule, 'month' means the period between two consecutive dates for payment of duty specified under sub-rule (1) or the first proviso to sub-rule (1), as the case may be. (4) The provisions of section 11 of the Act shall beapplicable for recovery of the duty as assessed under rule 6 and mentioned in the return filed under these rules, the interest under sub-rule (3) and penalty under sub-rule 3(A) in the same manner as they are applicable for recovery of any duty or other sums payable to Central Government. Explanation. For the purposes of this rule, the expressions 'duty' or 'duty of excise' shall also include the amount payable in terms of the CENVAT Credit Rules, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion or any wilful mis-statement or suppression of facts or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty;- (a) the Central Excise Officer shall, within twoyears from the relevant date, serve notice on the person chargeable with the duty which has not been so levied or paid or which has been so short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice; (b) the person chargeable with duty may, beforeservice of notice under clause (a), pay on the basis of, - (i) his own ascertainment of such duty; or (ii) the duty ascertained by the Central Excise Officer, the amount of duty along with interest payable thereon under section 11AA. (2) The person who has paid the duty under clause(b) of sub-section (1), shall inform the Central Excise Officer of such payment in writing, who, on receipt of such information, shall not serve any notice under clause (a) of that sub-section in respect of the duty so paid or any penalty leviable under the provisions of this Act or the rules made thereunde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion (4) is not sustainable for the reason that the charges of fraud or collusion or any wilful mis-statement or suppression of facts or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty has not been established against the person to whom the notice was issued, the Central Excise Officer shall determine the duty of excise payable by such person for the period of two years deeming as if the notice were issued under clause (a) of sub-section (1). (10) The Central Excise Officer shall, after allowingthe concerned person an opportunity of being heard, and after considering the representation, if any, made by such person, determine the amount of duty of excise due from such person not being in excess of the amount specified in the notice. (11) The Central Excise Officer shall determine theamount of duty of excise under sub-section (10) - (a) within six months from the date of noticewhere it is possible to do so, in respect of cases falling under sub-section (1); (b) within two years from the date of notice,where it is possible to do so, in respect of cases falling under sub-section (4) (12) Wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is required to be paid under this Act or the rules made thereunder; (iv) in a case where duty of excise is provisionally assessed under this Act or the rules made thereunder, the date of adjustment of duty after the final assessment thereof; (v) in the case of excisable goods on which duty of excise has been erroneously refunded, the date of such refund; (vi) in the case where only interest is to bere covered, the date of payment of duty to which such interest relates. Explanation 2.- For the removal of doubts, it is hereby declared that any non-levy, short-levy, non payment, short-payment or erroneous refund where no show cause notice has been issued before the date on which the Finance Bill, 2015 receives the assent of the President, shall be governed by the provisions of section 11A as amended by the Finance Act, 2015. 10. Section 11AB of the Act provides for payment of interest and Rule 25 Specifically confers power for confiscation and penalty. Rule 25 is quoted hereinbelow: RULE 25. Confiscation and penalty. - (1) Subject to the provisions of section 11AC of the Act, if any producer, manufacturer, registered person of a warehouse or an importer wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal and the tribunal was of the view that the procedural requirement as provided by the trade notice cannot override or delimit the operation of the statutory rules. It also recorded that Rule 21 of the Rules does not prescribe for any time limit for intimation of the losses. After holding the said, the Tribunal was pleased to allow the appeal filed by the assessee therein. The said order of the Tribunal has not been challenged and has been followed in number of judgments of the Tribunal. The department, clearly cannot take stand on an issue which has attained finality and thus, the argument of the counsel for the department on that count is not acceptable. 13. It is on record that the petitioner was served with a showcause notice under Section 11A of the Act claiming the payment of duty and interest under Section 11AB of the Act to which a Defense Reply was submitted. It was incumbent upon the Central Excise Authorities to have considered the documents submitted by the petitioner alongwith his defense reply including the fact that the sugar mill of the petitioner was under the control of the State Authorities and of the Central Excise Authorities. There is no denial of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o duty. In the present case there is no material to allege or establish that the brown sugar was marketable and once there is no foundation to hold that brown sugar, on which the remission was claimed, was marketable goods, no question of payment of duty arises. Even otherwise, no allegation was levelled in the show-cause notice with regard to clandestine removal, which was required to be established while raising a demand under Section 11A of the Act. In any event, the showcause notice was issued beyond the prescribed period of limitation and there was nothing on record to demonstrate that non-payment was attributed on account of suppression of facts or fraud or willful misstatement or collusion or contravention of any of the provisions of the act or the rules made thereunder. There being no such foundation in the show-cause notice nor has any finding been returned with respect to invocation of extended period of limitation, the impugned orders being order dated 29.12.2011 (Annexure 1), orders-in-Appeal dated 22.12.2009 (Annexures 13 14) as well as the orders-inoriginal dated 08.04.2009 and 06.04.2009 (Annexures 8 9) are clearly not sustainable and are set aside. 17. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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