Judgment:
1. The Additional Collector in the order held that dip reading method adopted by the officers was correct and practical method of measuring the quantity of molasses available in the factory's tanks and therefore held that the seized 4492.30 Qtls. of molasses is liable to confiscation and confiscated the same and also imposed a personal penalty of Rs. 2,000/- on them. Against this order, the appellants filed the present appeal.
2. The facts of the case are that on 1-5-1991 the Central Excise Officers visited the factory of the appellants. On physical verification of the stock of the molasses for the sugar season in the year 1990-91, the Central Excise Officers found an excess of 4492.30 Qtls. of molasses. This excess was determined on the basis of dip reading excluding foam. Since this excess was not specifically explained to the Central Excise Officers a show cause notice was issued to the appellants asking them to explain as to why the excess quantity should not be confiscated and why a penalty should not be imposed on them.
3. In reply to the show cause notice the appellants submitted that determination of weight of molasses in the said tanks has not been done by physical method but by volumetric method in as much the Central Excise Officers calculated the excess quantity with the help of dip reading method and the calibration chart. The appellants submitted that all the calibrartion charts are made out for 90 Brix; that if the Brix of the said molasses is higher or lower the weight determined with the help of dip reading and calibration which would vary. It was also contended that there is always presence of froth/foam, therefore while taking dip it is necessary to deduct the dip relating to froth/foam. It was also argued that weight varies according to the point from where the dip is taken; that due to certain reactions taking place in the molasses some reactions take place on account of which Carbon Di-oxide gas is formed which while trying to emerge/escape, causes the surface to go up; that for determination of specific gravity or density a number of factors are also very important like temperature etc. The Additional Collector after considering the submissions passed the order as indicated above.
4. Shri Gopal Prasad, ld. Advocate appearing for the appellants submits that for determination of quantity of molasses at any point of time the only accurate method is physical weighment. He submits that no physical weighment of the molasses was done at the time of physical stock taking. He submits that the method adopted by the Central Excise authorities was the method of calculating the quantity of molasses on the basis of dip reading. The learned Counsel submits that the method of dip reading suffers from a number of defects in as much as Brix of molasses changes and varies on account of factors over which the appellants had no control. He submits that the method of dip reading for calculating the quantity of molasses in the tanks is found to be incorrect. He submits that the Commissioner issued instructions to be followed while calculating the quantity of molasses. The learned Counsel submits that the method was by finding the volume of the molasses and multiplied by specific gravity/density at the time when stock was physically verified. He submits that in view of these instructions of the Commissioner the quantity should have been determined and should be determined. The learned Counsel submits that for the purpose of calculating the amount of duty as ascertained exact amount and weight must be determined and since molasses were available on the date of stock taking physical weight was not ascertained by the authorities, therefore the confiscation of molasses is not warranted.
He submits that excess quantity was not physically determined. He submits that the method of dip reading and calibration chart was rough and ready basis which subsequently was amended as it was found to be a defective method of calculation. He submits that in a number of decisions the Tribunal held that physical weighment was necessary for finding the exact excess/shortage and prays that the impugned order was bad in law therefore needs to be set aside. In support of his contention he refers to the judgment of this Tribunal in the case of Ghatampur Sugar Company Limited 1996 (85) E.L.T. 69.
5. Shri Ram Sharan, ld. JDR appearing for the respondent Commissioner submits that verification of excess of molasses was done on the basis of dip reading and calibration charts. He submits that at the time of taking verification of the stock of molasses in the tanks, the incharge of the laboratory of the appellants was present. He submits that the calibration charts and dip reading was an accepted method for verifying the weight during that period. He submits that the appellants have cited instructions issued by the Excise Commissioner but those instructions are dated 27-12-1991 whereas physical verification on the basis of dip reading and calibration chart was done on 1-5-1991. He submits that on the date of physical verification of molasses it was by adopting dip reading method; that these instructions were not available therefore he submits they cannot be taken for determination the weight in the instant case. The ld. JDR reiterates the findings of the lower authorities and submits that the molasses found in excess have rightly been confiscated and that because of this infringement of non-recording the correct weight a personal penalty is justifiable.
6. Heard the submissions of both sides. The first issue for determination in this appeal is whether the computation of excess weight of molasses by dip reading or calibration chart was correct or not. There is evidence on record that there was a method of dip reading and calibration chart. This method was accepted by the department as also by the appellants. No doubt this method suffers from a number of defects as pointed by the appellants in their reply to the show cause notice issued to them but since during the material period this was the rough and ready method for calculation of molasses at any particular point of time therefore this method was the correct method as on the date of physical verification of the stock. The main contention of the Advocate for the appellants was that this method was not correct and this contention was supported by the instructions issued by the Commissioner. My attention was drawn to the Circular No. 13517 /Dus-Sheera Needhi/83/91, dated 27-12-1991. In this circular the method for computation of weight of molasses in the tanks is set out. However I find that in this circular dated 27-12-1991 it has been stated that the aforesaid order will take immediate effect. Therefore I hold that this order will be effective for computing correct weight of molasses only from 27-12-1991. In the case before me the weight was ascertained on 1-5-1991, therefore the present circular will not be applicable to the present case for calculating the correct weight of molasses in the tanks. In the case of Ghatampur Sugar Company Limited 1996 (85) E.L.T.69 cited and relied upon by the learned Counsel I find that one of the contention was that the appellants were not given any concession on account of froth/foam among other things.
7. In the instant case I find that allowance for foam has been given to the appellants. I note that during the month of summer froth/foam is a natural phenomena with molasses. I agree with the contention that the CO2 gas in the process of fermentation is generated. Fermentation is a natural phenomena which causes changes in the Brix of molasses. CO2 in the process of escape or emerging from molasses creates froth/foam. In the instant case the allowance has been given therefore the ratio of the judgment cited by the appellants is not applicable to the present case. Having regard to the above discussions and findings I do not find any legal infirmity in the impugned order. In the result the impugned order is upheld and the appeal is rejected.