Bajaj Hindustan Sugar & Industries Ltd vs C.C.E. Allahabad

[Arising out of Order-in-Original No. MP[14/2009-Tech] 14/2009 dated 2.12.2009, passed by the Commissioner of Central Excise, Allahabad]

For approval and signature:

Honble Mr Ashok Jindal, Member (Judicial)

1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3 Whether Their Lordships wish to see the fair copy of the Order?

4 Whether Order is to be circulated to the Departmental authorities?

Bajaj Hindustan Sugar & Industries Ltd. .Appellants

Vs.

C.C.E. Allahabad .Respondent

Appearance:

Shri P.K. Mittal, Advocate for the Appellant

Shri R.K. Mishra, AR for the Respondent

CORAM:

Hon'ble Shri Ashok Jindal, Member (Judicial)

Date of Hearing: 08.06.2015

FINAL ORDER NO. 51866/ 2015

Per Ashok Jindal:

The appellant is in appeal against the impugned order denying remission of duty on molasses which became unusable due to auto-combustion.

2. The facts of the case are that the appellant is manufacturer of sugar and molasses. The appellant stored the molasses in steel tanks in factory premises due to heat of summer season in the month of May, 2008, the appellant intimated to the department that there is likelihood of auto-combustion in tank No.3 on 14.5.2008 and the shifted 7000Qtls. of molasses to other tanks. Remaining 11048.40 qtls. of molasses could not be shifted to other tanks / katcha pits. On 15.5.2008 auto-combustion took place and 11048 qtls. of molasses became unusable. The appellant intimated to the concerned authorities regarding the auto combustion which took place in tank No. 3 and filed claim of remission of duty on these burnt molasses. Claim of remission of duty was denied on the premise that appellant has not taken due care. Against the said order, appellant is before me.

3. Learned Counsel of the appellant draw my attention to the precautions taken by them to avoid auto-combustion such as spray of water on tanks to keep the temperature of tanks at lower side, re-circulation of molasses and use of anti-foaming agents to avoid auto-combustion. But unfortunately, the same cannot be avoided. The denial of remission by the adjudicating authority is only due to the reason that appellant has not taken proper care and have not taken sufficient precautions to prevent auto-combustion. Therefore, remission of duty cannot be denied as held by Honble High Court of Allahabad in the case of Basti Sugar Mill Company Ltd. [1992 (82)ECR 246 (Allahabad)]; Balrampur Chini Mills Ltd. vs. CCE [2000 (120) ELT184 (Tri-Del)]; UP State Sugar Corporation Ltd. vs. CCE Allahabad [2001 (137) ELT 948 (Tri-Del)]; CCE vs. Kanoria Sugar and General MFG. Co. Ltd. [2013 (292) ELT 387 (Tri-Del)].

4. On the other hand, learned AR reiterated the finding of the impugned order.

5. Heard the parties. Considered the submissions.

6. From the facts of the case, the issue arises before me is whether the appellant is entitled for remission of duty in case of auto-combustion which took place in the factory of appellant or not.

7. It is not in dispute that auto-combustion took place in the factory and molasses have been destroyed. To avoid the auto-combustion, the appellant has taken care to save the molasses. It is also on record that appellant has takes steps to save auto-combustion by way of spraying water to keep lower the temperature of tanks, recirculation of molasses and use of anti foaming agents. Nothing more has been suggested by the adjudicating authority to avoid auto combustion. Therefore, remission of duty cannot be denied in the light of decisions of Honble High Court of Allahabad and this Tribunal.

8. In the case of Basti Sugar Mills (supra), the Honble High Court of Allahabad has observed as under:

5.. In the present case it is admitted that the molasses stored in the storage in Tanks no. 2 and 4 were destroyed. The loss occurred due to internal combustion. It is not disputed by the Excise Authorities that such loss was due to internal combustion. What is, however, alleged is that there is no proper precaution taken by the petitioner to avoid such combustion in relation to Tanks no. 2 and 4 and in order to support this contention it is said that there was no natural combustion in Tank no. 1 and 5. The logic of the Excise Authorities appears to me to be totally fallacious and unjustified. If any natural combustion takes place in a particular storage in a tank, it does not mean that the same chemical reaction would take place in all the tanks. In that view of the matter, I hold that the petitioner had not cleared the balance of burnt molasses of 1476.302 M.T. The said quantity of burnt molasses will not be liable to duty of excise.

9. Further in the case of Balarampur Chini Mills Ltd. (supra), this Tribunal has observed as under:-

On careful consideration of the submissions made, we note that molasses is subject to dual control. Control is simultaneously exercised both by Central Excise Authorities as well as State Excise Controller of Molasses. We note further that the contention of the appellant was that they were doing everything including spraying of cold water on the tanks to prevent auto combustion and once auto combustion started, they informed the Central Excise Authorities as well as the State Excise Controller seeking guidance. We note that the appellants had gone right up to the High Court in their efforts to prevent total loss of molasses by auto combustion. Thus, we find that there was no negligence on the part of the appellant. In this view of the matter, we hold that it was a fit case for remission of duty. In the circumstances brought out by the appellants, we hold that the demand for duty is not sustainable. Similar cases we note came up before the Tribunal and the Tribunal after examining the facts held similarly. The cases cited and relied upon by the appellant decided by this Tribunal are the case of Saraya Sugar Mills v. CCE reported in 1997 (93) E.L.T. 264 and Shankar Sugar Mills v. CCE reported in 1994 (71) E.L.T. 753 (Tribunal) = 1994 (52) ECR 354.

10. In the case of UP State Sugar Corporation Ltd. (supra), again this Tribunal has observed as under:

3.?The only ground on which the Commissioner has rejected the request for remission of duty to the party is that they stored more molasses in the Masonry Tank No. 1 than its storage capacity and that they did not take ample and sufficient steps for cooling down the temperature when it was rising. It is difficult to comprehend, what steps the Commissioner wanted the party to take for cooling down the temperature when it was rising in the atmosphere itself. No such steps are spelt out in his order. Moreover, it is also admitted by the Commissioner in his order that the appellants were not entitled to remove/dispose off even a gram of molasses except in accordance with the orders of Controller of Molasses, as per the provisions of U.P. Sheera Niyantran Adhiniyam, 1964 and Niyamavali, 1974 and any contravention of these provisions would have attracted criminal prosecution of the partyAs per the facts before us, the molasses in this case was admittedly unfit for consumption or marketing and as such no duty was liable to be demanded on such molasses. We are further of the view that the quantity of molasses in question is destroyed by natural causes, beyond the control of the appellants. The Tribunal in the past decisions cited supra have constantly been upholding the appeals of the manufacturers for remission of duty in similar cases. In this view of the matter, we are of the view that this is a fit case for remission of duty and the confirmation of duty and imposition of penalty by the Commissioner are not warranted. ..

11. In the case of Kanoria Sugar and General MFG. Co. Ltd. (supra) again this Tribunal has observed as under:

5.?We have considered the submissions made by ld. AR. It is undisputed that 3164.900 MT of molasses stored in the molasses tank got burnt and become unfit for distillation and marketing due to auto-combustion. It is not the case of the department that the quantity of molasses lost in fire claimed by the assessee is incorrect or that molasses were removed from the factory clandestinely. Only ground in appeal is that the accident of burning could have been avoided by taking adequate precaution. In this regard, we may note that there is nothing in the report of the State Excise officer who visited the site for inspection which may suggest that the respondent was negligent or he failed to take steps to ensure cooling of the pipeline leading to the molasses tank and also recirculation of the molasses within the tank. Instead the report suggests that there was a provision for cooling of pipeline from the Mill to the storage tank and two pumps were installed for recirculation of the contents of storage tank. Report also says that auto combustion took place because of abnormal rise in temperature of molasses. From this report it cannot be concluded that the respondent was grossly negligent in maintenance of storage tank. Accordingly, we find no reason to fault the order of Commissioner granting remission of duty on the ground that the molasses has burnt due to unavoidable auto combustion accident.

12.. In the light of above decisions, the accident of auto-combustion was beyond the control of appellant. Therefore the appellant is entitled for remission of duty as claimed. In these circumstances, I do not find any merit in the impugned order, same is set aside. Appeal is allowed with consequential relief, if any.

(Dictated and pronounced in the open court)

(Ashok Jindal) Member (Judicial)

ss

1