Whether the remission of duty allowed to the assessee on loss of molasses occurred without his negligence?

PJ/CASE LAW/2015-16/2796

Case-BAJAJ HINDUSTAN SUGAR & INDUSTRIES LTD. VersusC.C.E., ALLAHABAD

Citation-2015 (323) E.L.T. 412 (Tri. - Del.)

Brief Facts-The facts of the case are that appellant is a manufacturer of sugar and molasses. They store molasses in the storage tank. On 12-2-2008, 46,865.30 quintals of molasses stored in storage tank was burned which was reportedly due to pressure of stored molasses. The appellant filed a claim of remission of duty on 22-5-2008. The claim of remission of duty was rejected by the ld. Commissioner on the grounds that the storage tank was not filled to its full capacity, the storage tank was duly tested before put to use and the reports of other authorities was not provided to the ld. Commissioner to make him satisfied under Rule 21 of the Central Excise Rules, 2002 to sanction the claim of remission of duty. Aggrieved from the said order, appellant is before the tribunal.

Appelants Contention-The ld. Counsel appearing on behalf of the appellant drew tribunal’s attention to the show cause notice wherein it has been mentioned that capacity of storage tank is 1 lakh quintals of molasses whereas only 60,424 quintals of molasses was stored which is much less than the capacity of the storage tank. Moreover, the show cause notice itself is certifying that before storage tank is put to use they are duly tested and found to be in order. It is also a fact that due to pressure stored in molasses the storage tank was burst and there was a loss of 46,865.30 quintals of molasses. As these facts are not in dispute the appellant is entitled to claim remission of duty. As when accident took place the appellant immediately reported to the concerned authorities and accident did not took place due to fault of the appellant. Therefore, appellant is entitled for the claim of remission of duty as held by Hon’ble High Court of Allahabad in the case of Basti Sugar Mills Company Ltd. - 1999 (82) ECR 246 (All.), this Tribunal in the case of Balrampur Chini Mills Ltd. - 2000 (120)E.L.T.184 (Tri.-Del.), in the case of UP State Sugar Corporation Ltd. - 2001 (187) E.L.T. 490 (Del.), in the case of Kanoria Sugar & General Manufacture Co. Ltd. - 2013 (292)E.L.T.387 (Tri.-Del.) and in the case of Kisan Sahkari Chinni Mills Ltd. - 2008 (222)E.L.T.540 (Tri.-Del.).

Respondents Contention-On the other hand ld. AR oppose the contention of the ld. Counsel and submits that in this case the molasses were stored less than the capacity of the storage tank, there may be some other reason for bursting of the tank. Moreover, the storage tank was duly tested before put to use and the appellant has not provided the reports or investigation conducted by the other authorities to the ld. Commissioner to ascertain the cause of accident. Therefore, ld. Commissioner has rightly denied the claim of remission of duty. She further submits that the case laws relied upon by the ld. Counsel are not relevant to the facts of this case as in those cases the accident took place due to auto combustion which is not in this case. She further submits that the appellant did not provide the list of precautions. In the case of UP State Sugar Corporation Ltd. (supra) it was more quantity stored than the capacity of the storage tank, therefore, the said decision is not applicable.

Reasoning Of Judgement-Heard the parties. Considered the submissions.In this case the facts which are admitted are as under :
That the storage capacity of the storage tank was 1 lakh quintal of molasses whereas 60,424 quintal of molasses were stored. The storage tank was duly checked and tested before put to use. It is also a fact that accident took place on 12-2-2008 wherein 46,865.30 quintal of molasses were destroyed. From the facts of the case, it is not coming out how the appellant was negligent in storing the molasses. It is not a case where appellant has stored more quantity than the capacity of the storage tank. So the appellant could be negligent. Moreover, before putting the storage tank into use, the storage tank was duly tested. Therefore, the appellant has taken all precautions before storing the molasses in the said storage tank. No prudent men will invite accident to incur losses. Revenue had not come with any tangible findings that appellant was negligent by not following the precautions. In fact, in show cause notice, it is recorded that the storage capacity was more than the quantity stored. Moreover, storage tank was duly tested before put to use. Then what more precautions were required by the appellant to avoid the accident. In the absence of any of these requirements it cannot be said that appellant was negligent while storing the molasses in the storage tank. The accident may occur by any reason if you take due precautions to avoid accident. Therefore, without any concrete findings that appellant was negligent in a particular way the allegation of negligence is not sustainable. In these terms, Tribunal hold that the appellant is entitled for claim of remission of duty without relying on the case laws relied upon by the appellant. Therefore, tribunal do not find any merit in the impugned order. Same is set aside. Appeal is allowed with consequential relief if any.

Decision-Appeal allowed

Comment-The gist of the case is that the blast has taken place in furnace tank due to which the molasses are lost but this doesn’t meant that the assessee was negligent. As the tank was duly checked and tested by the assessee before use and as the storage capacity is also more than the quantity of molasses stored in tank this shows that the assessee has taken all the possible precautions and is not negligent in storing the molasses. Therefore, the remission of duty is allowed to the assessee.

Prepared By-Neelam Jain

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PJ/CASE LAW/2015-16/2796

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