Shamli Distillery and Chemical Vs. Commissioner of C. Ex. - Court Judgment

Excerpt:
1. in this appeal, the grievance of the appellants is that the commissioner of central excise rejected all the remission applications submitted by them for the period july, 2000 to january, 2001 under sub-rule (1a) of rule 49 of the central excise rules, 1944.2. the appellants are manufacturers of excisable goods, one of these goods being ethyl alcohol (denatured) falling under sub-heading 2204.10 of the central excise tariff schedule. ethyl alcohol (denatured), hereinafter referred to as "denatured spirit", is stored in steel tanks. after the close of every month of the aforementioned period, they filed an application with the jurisdictional assistant commissioner claiming remission of duty in respect of the loss/wastage which allegedly occurred due to the natural cause of evaporation. such application was accompanied by a certificate issued by the up state excise officer incharge of the factory, which certified that the loss of denatured spirit for the month having been found to be below 0.5% in terms of order nos. 11377-88/ix-241-a, dated 18-2-78 had been admitted (purportedly for remission of state excise duty). there were seven such applications filed for the entire period of dispute. all these applications were rejected by the commissioner. the ground stated in the impugned order for rejecting the applications is that the appellants had not followed the procedure laid down under trade notice no. 206/84, dated 1-12-84 of the meerut commissioner-ate of central excise. the impugned order further holds to the effect that any decision of the state excise authorities to allow storage loss of the subject goods cannot be the basis for remission of central excise duty in respect of such loss under rule 49 of the central excise rules, 1944. in the present appeal, it is contended that the elaborate procedure laid down by the up state excise authorities, who exercise physical control over the manufacture of the subject goods, should govern the area of remission of central excise duty on the goods under rule 49 of the central excise rules, 1944 in the absence of specific procedure having been laid down in this behalf by the central excise authorities. it is further contended that the trade notice of the meerut commissionerate of central excise, relied on by the adjudicating authority in this case, is not applicable. some case law has also been relied upon by the appellants. the learned counsel for the appellants reiterates all these grounds and prays for allowing this appeal.3. the learned sdr, on the other hand, submits that the manufacturer who claims remission of duty under sub-rule (1a) of rule 49 on the ground of shortage or storage loss due to natural causes should discharge his burden of satisfying the jurisdictional commissioner, of having lost the goods due to natural causes. in this case, according to the dr, there is no proof of any loss of denatured spirit, apart from the certificates issued by the state excise authorities. she further submits that these certificates accompanying the remission applications do not seem to be authentic in the absence of normal marks of authenticity, such as name and signature of the excise officer who issued the certificate, seal of that officer, etc. it is further pointed out that these certificates are based on some order passed by the up state excise commissioner in 1978. in the absence of authenticated copy of the said order of the state excise commissioner, it would not be possible for the central excise commissioner to assess the probative value of the certificates. it is further argued that the trade notice relied on in the impugned order is very much applicable to this case.4. i have examined the submissions. as already noted, the impugned order has relied on the trade notice on the one hand and rejected the certificates of the state excise authorities on the other. insofar as the trade notice is concerned, my attention has been drawn to a copy thereof available on record, and i find that this trade notice laid down the procedure for filing remission applications in respect of losses of excisable goods resulting from accidents. it has not been disputed before me that natural evaporation of denatured spirit is not a case of accident. it has even been acknowledged by the adjudicating authority that the loss of denatured spirit occurred due to the natural phenomenon of evaporation. the trade notice cannot apply to the case.the reliance placed by the learned commissioner is totally misplaced.the commissioner has rejected the certificates of the state excise authorities produced by the assessee. in this context, i observe that there is no specific procedure laid down to govern applications under sub-rule (1a) of rule 49, but this sub-rule requires that a claimant for remission of duty should satisfy the commissioner that the loss occurred due to any of the reasons enumerated in the said sub-rule. one of these reasons is loss due to natural causes. in the instant case, the loss of denatured spirit has been found to be due to a natural cause. hence it is incumbent on the claimant to satisfy the commissioner that the alleged storage loss was due to natural cause and to what extent. apparently, this has not happened in this case as the sole evidence produced by the claimant was rejected by the commissioner.5. in the facts and circumstances of the case, i am of the view that the jurisdictional commissioner should take a fresh decision on the remission applications without reference to the trade notice but with due regard to the evidence adduced. as rightly pointed out by the learned dr, the certificates accompanying the remission applications do not appear to be authenticated. it will be up to the appellants to produce authenticated documents before the commissioner. it will also be open to them to produce authenticated copy of the state excise commissioner's order referred to in the applications. in the absence of specific procedure having been laid down for the purpose of sub-rule (1a) of rule 49 and in view of the fact that the appellants' factory is under physical control of the state excise authorities as also of the fact that there is an elaborate procedure laid down by those authorities governing remission of state excise duty, i am of the view that, under sub-rule (1a) of rule 49, the commissioner shall have due regard to the above documentary evidence from the state excise authorities.6. in the result, the impugned order is set aside and this appeal is allowed by way of remand. the jurisdictional commissioner shall pass a fresh speaking order on the remission applications as above after giving the party a reasonable opportunity of being heard.

Judgment:
1. In this appeal, the grievance of the appellants is that the Commissioner of Central Excise rejected all the remission applications submitted by them for the period July, 2000 to January, 2001 under Sub-rule (1A) of Rule 49 of the Central Excise Rules, 1944.

2. The appellants are manufacturers of excisable goods, one of these goods being Ethyl Alcohol (Denatured) falling under sub-heading 2204.10 of the Central Excise Tariff Schedule. Ethyl Alcohol (Denatured), hereinafter referred to as "Denatured spirit", is stored in steel tanks. After the close of every month of the aforementioned period, they filed an application with the jurisdictional Assistant Commissioner claiming remission of duty in respect of the loss/wastage which allegedly occurred due to the natural cause of evaporation. Such application was accompanied by a certificate issued by the UP State Excise Officer Incharge of the factory, which certified that the loss of denatured spirit for the month having been found to be below 0.5% in terms of order Nos. 11377-88/IX-241-A, dated 18-2-78 had been admitted (purportedly for remission of State excise duty). There were seven such applications filed for the entire period of dispute. All these applications were rejected by the Commissioner. The ground stated in the impugned order for rejecting the applications is that the appellants had not followed the procedure laid down under Trade Notice No. 206/84, dated 1-12-84 of the Meerut Commissioner-ate of Central Excise. The impugned order further holds to the effect that any decision of the State Excise authorities to allow storage loss of the subject goods cannot be the basis for remission of Central Excise duty in respect of such loss under Rule 49 of the Central Excise Rules, 1944. In the present appeal, it is contended that the elaborate procedure laid down by the UP State Excise authorities, who exercise physical control over the manufacture of the subject goods, should govern the area of remission of Central Excise duty on the goods under Rule 49 of the Central Excise Rules, 1944 in the absence of specific procedure having been laid down in this behalf by the Central Excise authorities. It is further contended that the Trade Notice of the Meerut Commissionerate of Central Excise, relied on by the adjudicating authority in this case, is not applicable. Some case law has also been relied upon by the appellants. The learned Counsel for the appellants reiterates all these grounds and prays for allowing this appeal.

3. The learned SDR, on the other hand, submits that the manufacturer who claims remission of duty under Sub-rule (1A) of Rule 49 on the ground of shortage or storage loss due to natural causes should discharge his burden of satisfying the jurisdictional Commissioner, of having lost the goods due to natural causes. In this case, according to the DR, there is no proof of any loss of denatured spirit, apart from the certificates issued by the State Excise authorities. She further submits that these certificates accompanying the remission applications do not seem to be authentic in the absence of normal marks of authenticity, such as name and signature of the Excise officer who issued the certificate, seal of that officer, etc. It is further pointed out that these certificates are based on some order passed by the UP State Excise Commissioner in 1978. In the absence of authenticated copy of the said order of the State Excise Commissioner, it would not be possible for the Central Excise Commissioner to assess the probative value of the certificates. It is further argued that the Trade Notice relied on in the impugned order is very much applicable to this case.

4. I have examined the submissions. As already noted, the impugned order has relied on the Trade Notice on the one hand and rejected the certificates of the State Excise authorities on the other. Insofar as the Trade Notice is concerned, my attention has been drawn to a copy thereof available on record, and I find that this Trade Notice laid down the procedure for filing remission applications in respect of losses of excisable goods resulting from accidents. It has not been disputed before me that natural evaporation of denatured spirit is not a case of accident. It has even been acknowledged by the adjudicating authority that the loss of denatured spirit occurred due to the natural phenomenon of evaporation. The Trade Notice cannot apply to the case.

The reliance placed by the learned Commissioner is totally misplaced.

The Commissioner has rejected the certificates of the State Excise authorities produced by the assessee. In this context, I observe that there is no specific procedure laid down to govern applications under Sub-rule (1A) of Rule 49, but this sub-rule requires that a claimant for remission of duty should satisfy the Commissioner that the loss occurred due to any of the reasons enumerated in the said sub-rule. One of these reasons is loss due to natural causes. In the instant case, the loss of denatured spirit has been found to be due to a natural cause. Hence it is incumbent on the claimant to satisfy the Commissioner that the alleged storage loss was due to natural cause and to what extent. Apparently, this has not happened in this case as the sole evidence produced by the claimant was rejected by the Commissioner.

5. In the facts and circumstances of the case, I am of the view that the jurisdictional Commissioner should take a fresh decision on the remission applications without reference to the Trade Notice but with due regard to the evidence adduced. As rightly pointed out by the learned DR, the certificates accompanying the remission applications do not appear to be authenticated. It will be up to the appellants to produce authenticated documents before the Commissioner. It will also be open to them to produce authenticated copy of the State Excise Commissioner's order referred to in the applications. In the absence of specific procedure having been laid down for the purpose of Sub-rule (1A) of Rule 49 and in view of the fact that the appellants' factory is under physical control of the State Excise authorities as also of the fact that there is an elaborate procedure laid down by those authorities governing remission of State excise duty, I am of the view that, under Sub-rule (1A) of Rule 49, the Commissioner shall have due regard to the above documentary evidence from the State Excise authorities.

6. In the result, the impugned order is set aside and this appeal is allowed by way of remand. The jurisdictional Commissioner shall pass a fresh speaking order on the remission applications as above after giving the party a reasonable opportunity of being heard.