Commissioner Of Central Exise, ... vs M/S. Dharani Sugars & Chemicals Ltd

[Arising out of Order-in-Appeal No.36 & 37/2004-(TVL)(D)(ADK), dated 29.04.2004 passed by the Commissioner of Central Excise (Appeals-1), Trichirapalli]

COMMISSIONER OF CENTRAL EXISE, TIRUNELVELI APPELLANT

Versus

M/s. DHARANI SUGARS & CHEMICALS LTD. RESPONDENT

Appearance:

For the Appellant Ms. Indira Sisupal, AC (AR)

For the Respondent Shri N. Prasad, Adv.

CORAM:

Honble Shri D.N. Panda, Judicial Member Honbe Shri R. Periasami, Technical Member

Date of hearing/decision 16-04-2015

FINAL ORDER NOs. 40429 & 40430/ 2015

Per D.N. Panda:

The precise question in this appeal is whether the duty paid on the molasses generated by sugar plant of appellant and such molasses utilised for the purpose of manufacture of de-natured spirit, rectified spirit and extra neutral alcohol, shall allow the appellant to transfer the credit of the duty so paid on molasses for set off against the duty liability against the sugar cleared from the factory.

2. The above question is precisely answered by the Honble High Court of Madras in the case of Commissioner of Central Excise, Madurai Vs Rajshree Sugars and Chemicals Ltd. reported in 2014 (299) E.L.T.277 (Mad.) in para 10 of the judgment on similar facts dealt in para 2 of the judgment. For the benefit of reading, both the paragraphs are reproduced below:-

2.?The assessee herein is a manufacturer of sugar. The by-products arising on the manufacture of sugar, namely, molasses, was again used by the assessee in the manufacture of Ethyl Alcohol. For the reasons best known to the assessee, originally, although both units are under one Management, it obtained two separate registration certificates, one for sugar unit and another for distillery unit, which is situated adjacent to the sugar unit. Admittedly, the assessee cleared molasses on payment of duty and availed credit for the distillery unit for payment of duty on the dutiable Ethyl Alcohol. It is stated that over a period of time, there was huge accumulation of credit in the distillery unit and the same remained unutilised. Even though the assessee had two registration certificates, one for sugar unit and another for distillery unit, on 30-6-1999, the assessee requested the Revenue for one single registration certificate for both the units. On getting the same, in respect of the unutilised credit in the distillery unit, the assessee sought to use the same on the duty payable on the manufactured sugar. To avail of the same, the assessee sent a letter on 4-10-1999 to the Deputy Commissioner of Central Excise, Dindigul stating that they had transferred the closing balance of Rs. 1,38,69,137/- as on 30-9-1999 available under RG 23-A Pt.II of the distillery division to RG 23A Pt.II of Sugar division on 1-10-1999. It is stated that the credit involved in the lying stock of molasses was worked out at Rs. 44,06,511/-. On these facts, the Assistant Commissioner of Central Excise issued a show cause notice to the assessee to explain how the assessee would be entitled to the credit of Rs. 94,62,626/- taken to the sugar unit from the distillery unit. The notice pointed out that the assessee had wrongly transferred the entire credit amount and that they would be entitled to a transfer of credit of Rs. 44,06,511/- only. Thus, the excess credit of Rs. 94,62,626/- was liable to be recovered as per Rule 57-I of erstwhile Central Excise Rules, 1944 read with Section 11A of the Central Excise Act, 1944. On the above allegation, penalty was also proposed to be imposed on the assessee.

10.?We agree with the contentions made by the learned counsel appearing for the assessee. As already seen in the preceding paragraph, the sugar unit and the distillery unit belonged to the self-same management and they are in the same premises. Although there are two units functioning, it is not denied by the Revenue that the resultant Molasses from the manufacture of sugar was used by the assessee in the manufacture of denatured Ethyl Alcohol. Although In respect of two activities, it had maintained two accounts, yet, it related to the business of the same assessee in respect of two activities, which are interconnected too. In the circumstances, the assessee decided to go for one registration alone as against two registrations originally taken. This decision was in tune with the management, administration and control of two units under the same head. In the above circumstances, we do not find any logical reason to accept the plea of the Revenue that on the mere taking of a single registration as against the two registrations, there was merger or amalgamation or transfer to hold that the assessee would not be entitled to any credit adjustment on the duty payable on sugar manufactured.

3. In view of the above, Revenue appeal is dismissed.

(Dictated and pronounced in open court)

(R. PERIASAMI) (D.N. PANDA) TECHNICAL MEMBER JUDICIAL MEMBER

ksr 17-04-2015

DRAFT Remarks

I II III

Date of dictation 15.04.2015

Draft Order - Date of typing 17.04.2015

Fair Order Typing 17.04.2015

Date of number and date of dispatch 20/04/2015

5 E/01163/2004 & E/01164/2004