C.C. & C.E. & S.T. Allahabad vs M/S Simbhaoli Sugars Ltd

[Arising out of Order-In-Appeal No. 01/CE/ALLD/2014 dated: 15.01.2014 passed by CCE & ST Allahabad]

For approval and signature:

Hon'ble Mr. S.K. Mohanty, 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?

C.C. & C.E. & S.T. Allahabad ...Appellant

Vs.

M/s Simbhaoli Sugars Ltd. Respondent

Appearance:

Mr. G R Singh, DR for the Appellant

Mr. Kapil Vaish, CA for the Respondent

CORAM:

Hon'ble Mr. S.K. Mohanty, Member (Judicial)

Date of Hearing. 03.06.2015

FINAL ORDER NO. 53088/2015

Per S. K. Mohanty:

The Revenue is in appeal against the impugned order dated 15.01.2014 passed by the Commissioner (Appeals) Central Excise - Allahabad, holding that in case of loss of molasses due to evaporation, the cenvat credit taken cannot be denied in terms of Rule 3(5)(B) of the Cenvat Credit Rules, 2004.

2. The Revenue has preferred this appeal on the ground that the inputs which are used in or in relation to manufacture final product, will be considered as input for the purpose of taking cenvat credit; that since the input goods i.e. molasses were lost during the course of storage i.e. before being put to use for manufacture excisable final product, the quantity of such lost molasses will not be considered as input and resultantly, the cenvat credit attributable to such lost quantity will not be available to the Respondent.

3. The brief facts of the case are that the respondent is registered under the Central Excise statute for the Sugar and Distillery Division. During the course of manufacture of sugar, a byproduct namely, molasses emerges during process in the sugar division. The said molasses are captively used for manufacture of Industrial Alcohol in the distillery division of the respondent. Apart from using own manufactured molasses, the Respondent also procures molasses from outside parties on payment of Central Excise duty under the cover of prescribed invoices. The Respondent avails cenvat credit of central excise duty paid on molasses in the cenvat records maintained in the distillery division. Upon receipt of the input i.e. molasses in the distillery division, the Respondent stored the same in the storage tank installed in the factory. During the course of handling of the said input, some quantity is lost due to evaporation. Since the cenvat credit is taken by the respondent on the entire quantity of molasses received in the factory on the basis of the invoices, the Department raised the objection that the quantity lost due to evaporation will not be eligible for cenvat benefit. The Central Excise duty demand in this regard was confirmed in the Adjudication Order dated 31.07.2013. Feeling aggrieved with the said Adjudication Order, the Respondent herein had preferred appeal before the Commissioner (Appeals) which was disposed of in favour of the Respondent. Hence, the Revenue has filed the appeal before this Tribunal.

4. The short question involved in this appeal for determination by this Tribunal, is as to whether, the Respondent was liable to reverse the Cenvat Credit on the quantity of molasses which were lost during storage and whether provisions of Rule 3(5)(B) of Cenvat Credit Rules, 2004 are applicable for reversal of such cenvat credit.

5. The issue involved in the present appeal has been answered by the Commissioner (Appeals) at page 7 in the impugned order wherein, while distinguishing the applicability of Rule 3(5)(B) of the Cenvat Credit Rules, 2004 to the facts of the present case, it has been held that the provisions of said Rule applies only when value of input is written of either fully or partially; that since storage loss in molasses is a natural phenomenon and the value has not been written off in the books, the provisions of Rule 3(5)(B) will not have any application and there was no requirement of reversal of cenvat credit. The Commissioner (Appeals) has arrived at such conclusion based on the decision of this Bench of the Tribunal in the case of The Kesar Enterprises Ltd.(order no. 1095-1096/2002 NB dated 26.08.2002).

6. In view of the fact that the Commissioner (Appeals) has passed a reasoned/ speaking order, upon proper analysis of the statutory provisions and their applicability to the facts of the present case, I am of the opinion that the grounds raised in this appeal to negate such order is not proper. Further, I find that the Tribunal decision in the case of The Kesar Enterprises (supra) has also been attained finality in view of dismissal of Revenue appeal by the Honble Supreme Court vide order dated 4.8.2003. Therefore, I do not find any merits in the appeal filed by the Revenue appellant and as such, the same is dismissed.

(Dictated and pronounced in open court)

(S.K. Mohanty)

Member(Judicial)

Neha

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