The Kisan Sahkari Chini Mills ... vs Union Of India Thr.The ...
2022 Latest Caselaw 10697 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD, LUCKNOW BENCH
 
 

								      Reserved
 
Court No. - 18
 

 
Case :- WRIT - C No. - 1000920 of 2012
 
Petitioner :- The Kisan Sahkari Chini Mills Ltd.Thr.Its General Manager
 
Respondent :- Union Of India Thr.The Secy.Deptt.Of Revenue And 4 Others
 
Counsel for Petitioner :- G.S.Bisht,Alam Singh,Dipak Seth
 
Counsel for Respondent :- A.S.G.,Rajesh Singh Chauhan
 
A N D 
 
Case :- WRIT - C No. - 1002298 of 2012
 
Petitioner :- The Kisan Sahkari Chini Mills Ltd. Mahmudabad Distt.Sitapur
 
Respondent :- Union Of India Thru. The Secy. Deptt. Reveneue And Ors.
 
Counsel for Petitioner :- G.S. Bisht
 
Counsel for Respondent :- A.S.G.,Dipak Seth,Rajesh Singh Chauhan
 
A N D
 
Case :- WRIT - C No. - 1001095 of 2014
 
Petitioner :- Simbhaoli Sugars Ltd. Thru General Manager Legal Gonda
 
Respondent :- Union Of India Thru Secy.Min.Of Finance Deptt.Of Revenueando
 
Counsel for Petitioner :- Durgesh Kumar Verma,Neeraj Sharma,Paavan Awasthi
 
Counsel for Respondent :- Dipak Seth
 

 
Hon'ble Pankaj Bhatia,J.

1. Since common questions are involved, all the three writ petitions are being decided by this common order.

2. Facts of Writ - C No.1000920 of 2012 are as follows:

(i) The petition has been filed challenging the order dated 14.10.2011 passed by respondent no.2 in exercise of powers under Section 35 EE of the Central Excise Act, the appellate order dated 25.02.2009 passed by Commissioner (Appeals), Customs and Central Excise, Lucknow as well as the order-in-original dated 17.09.2008 passed by Assistant Commissioner, Central Excise Division, Sitapur.

(ii) The petitioner claims to be a co-operative sugar mill registered under the Co-operative Societies Act and is engaged in manufacturing of sugar and molasses falling under Central Excise Tariff Heading No.17011190 & 17031000 of the Central Excise Tariff Act, 1985 and was paying the central excise duty at the time of clearance of the product. It is claimed that the factory remains under the physical control of the State Excise Authorities under the provisions of U.P. Sheera Niyantran Niyamavali, 1974. It is alleged that on 26.05.2007 at 06:00 am in the morning, there was an accident in the factory which resulted in the leakage of the tank where molasses were stored which resulted in the loss of 3240 qntls. of stored molasses. It is claimed that this fact was in the knowledge of the Deputy Excise Inspector of the State Government who is permanently posted in the mill and it is also claimed that the Inspector of Central Excise Department posted in the petitioner-factory also noticed the same accident. Sufficient evidences have been given to the effect that the facts were within the notice of the said excise authorities.

(iii) It is claimed that on 26.05.2007, a formal intimation of the said incident was given to the Assistant Commissioner, Central Excise, Sitapur and Inspector, Central Excise, Mahmoodabad. It is claimed that the petitioner also made a claim of remission vide letter dated 28.05.2007. The petitoner filed his monthly return in the Form E.R.1, which was prescribed under Rule 12 of the Central Excise Rules, 2002, however, no query was raised. The said E.R.1 form also showed the wastage of 3240 qntls. of molasses in the month of May, 2007 and for the month of September, 2007 and November, 2007 the E.R.1 forms were also submitted which showed a wastage of 230 qntls. and 350 qntls. of molasses by the petitioner. It is further stated that on 05.12.2007 an application for remission of duty in terms of Rule 21 of the Central Excise Rules was submitted to the Assistant Commissioner, Central Excise, Sitapur through messenger that however on 03.03.2008, the petitioner was served with a show-cause notice alleging that during the scrutiny of E.R.1 for the month of May, 2007 to November, 2007, the petitioner has shown 3820 qntls. of molasses as storage loss and whereas he did not file any application under Rule 21 of the Central Excise Rules, 2002 read with Trade Notice No. 29/2003 dated 01.10.2003 regarding the condonation of duty on such storage loss whereas the remission application was required to be filed within prescribed period of 24 hours of such storage loss. It was also recorded that as the petitioner has not shown to the satisfaction of the proper officer that the quantity of 3820 qntls. of molasses were lost or destroyed due to natural causes or by unavoidable accident, the said storage loss of molasses is wastage during handling which is evidently wastage due to improper and careless storage and handling of stored quantity and/or clearance without invoice and payment of duty. The said show-cause notice is contained in Annexure - 7.

(iv) It was also alleged that the petitioner had thus violated the provisions of Rule 4, 6, 8, 10 and 11 of the Central Excise Rules and was, thus, liable to pay duty amounting to Rs.2,95,095/- on the said 3820 qntls. of molasses and further he was liable for penalty under Rule 25 of the Central Excise Rules.

(v) The said notice was issued under Section 11A read with Section 11-AB of the Central Excise Act. The petitioner submitted a Defense Reply on 19.07.2008 giving his version with regard to the accident being beyond the control of the petitioner. Alongwith the said reply, he also appended a copy of the application filed by him seeking remission in terms of Rule 21 of the Central Excise Rules. He also informed that the entire accident was well within the knowledge of the State Authorities and of the Central Excise Authorities. He also placed reliance on Circular No.261/15/82/CX-VIII dated 18.07.1983 which had allowed remission up to the maximum 2% loss due to natural causes. The petitioner also relied upon various judgments, however, the Assistant Commissioner, Central Excise Division, Sitapur vide order-in-original dated 17.09.2008 confirmed the demand of excise duty of Rs.2,95,095/- alongwith interest under Section 11A/11AB of Central Excise Act and further imposed a penalty of this like amount in exercise of powers under Rule 25 of the Central Excise Rules.

(vi) The order records that no application as prescribed in the format in the Trade Notice No.29/2003 dated 01.10.2003 has been given by the assessee till today. It was also recorded that no application as claimed by the petitioner was ever given to the department.

(vii) Aggrieved against the said order, the petitioner preferred an appeal before the Commissioner (Appeals). In the said appeal it was further denied that the trade notice could not prescribe the time limit and is not binding on the assessee. The appellate authority by means of an order dated 25.02.2009 dismissed the appeal after recording the submissions of the appellant on the same grounds on which the order-in-original was passed mainly placing reliance on the Trade Notice No.29/2003. The said order of Commissioner (Appeals), Customs and Central Excise, Lucknow was challenged in a Revision Application under Sections 35EE of the Central Excise Act, which too has been dismissed by means of the order dated 14.10.2011 based upon which the other two orders were passed.

3. Facts of Writ - C No. 1002298 of 2012 are as follows:

(i) The petition has been filed challenging the order dated 29.12.2011 whereby the revision preferred by the petitioner under Section 35EE of the Central Excise Act has been dismissed, the order-in-appeal nos.236-CE/LKO/2009 & 237-CE/LKO/2009 both dated 22.12.2009 passed by Commissioner of Customs and Central Excise (Appeals), Lucknow as well as the order-in-original dated 08.04.2009 passed by Assistant Commissioner, Central Excise Division, Sitapur.

(ii) The petitioner claims to be a co-operative society manufacturing sugar at Sitapur and is duly registered under the Central Excise Act. It is claimed that in the process of manufacturing sugar at the end of the manufacturing season, some sugar residue-in-process remains in the machines containing 90% or more of sucrose and very high percentage of molasses and other impurities. The said sugar is known as ''Brown Sugar' and is not marketable and cannot be sold in the market due to the high content of molasses and other impurities. It is claimed that the brown sugar for the season 2001-02, 2002-03, 2003-04, 2004-05 & 2005-06 was reprocessed during the sugar season 2005-06 and 2006-07. After reprocessing the said brown sugar, the standard sugar and molasses were obtained on which the central excise duty was paid without there being any dispute on that count.

(iii) It is claimed that during the reprocessing of the brown sugar, loss of some quantity of brown sugar took place, which was informed to the department vide letter dated 08.08.2006. It is further claimed that the petitioner vide letter dated 07.07.2007 informed the department regarding loss of 1081 qntls. of brown sugar during reprocessing of 8996 qntls. of brown sugar. The petitioner was served with a demand-cum-show cause notice dated 21.11.2006 stating that on the scrutiny of the E.R.1 form for the month of November, 2005 to March, 2006, it was found that the petitioner has reprocessed 9632 qntls. of brown sugar and recovered only 8431 qntls. of white sugar, thus, there was a reprocessing loss of 1201 qntls. of brown sugar on which the petitioner neither paid any duty nor claimed any remission of duty under Rule 21 of the Central Excise Rules and thus, the petitioner was called upon to show-cause as to why central excise duty may not be levied and demanded on the 1201 qntls. of brown sugar with interest and penalty.

(iv) The petitioner was also served with another demand - cum - show cause notice dated 16.11.2007 alleging that the petitioner had intimated vide letter dated 07.07.2007 that he has reprocessed 9896 qntls. of brown sugar during the year 2006-07 and had recovered 7915 qntls. of white sugar, thus, claimed reprocessing loss of 1081 qntls. and as the petitioner had neither paid duty nor had claimed any remission of duty under Rule 21 of the Central Excise Rules, he was called upon to show-cause as to why the duty may not be demanded on the said 1081 qntls. of sugar alongwith interest and why penalty may not be imposed upon him.

(v) The petitioner submitted his Defense Reply to the said two show-cause notices separately basically claiming that the product ''Brown Sugar' on which the duty was being demanded was not marketable and could not be treated as finished standard sugar. It was also claimed that the petitioner did not file any remission application under Rule 21 of the Central Excise Rules as the same is required only in respect of finished exciseable goods and not on unmarketable goods. He also relied upon the restrictions placed by the Government Departments on sell of brown sugar.

(vi) The department vide order dated 08.04.2009 proceeded to pass two orders against the petitioner (Annexures - 8 & 9) placing reliance upon the Trade Notice No.29/2003 dated 01.10.2003 and rejected the request of the petitioner for remission of duty and proceeded to levy central excise duty of Rs.1,04,127/- on 1201 qntls. of sugar lost during the processing under Section 11A of the Central Excise Act and interest was also imposed under Section 11AB of the Act and further penalty of the like amount was imposed under Rule 25 of the Central Excise Rules.

(vii) Vide similar order dated 06.04.2009 and on the same grounds, a demand of Central Excise Duty of Rs.93,723/- on 1081 qntls. of sugar was levied under Section 11A of the Central Excise Act alongwith interest under Section 11AB of the Act and further penalty of the like amount under Rule 25 of the Central Excise Rules.

(viii) The petitioner preferred an appeal against the said orde before the Commissioner (Appeals) once again reiterating that brown sugar is not taxable as the same is not marketable, however, the appeal came to be dismissed vide two separate orders both dated 22.12.2009 mainly on the same grounds as contained in the order-in-original.

(ix) The petitioner preferred a revision under Section 35EE of the Central Excise Act, which too has been dismissed by means of the order dated 03.01.2012 (Annexure - 1).

4. Facts of Writ - C No. 1001095 of 2014 are as follows:

(i) The present petition has been filed challenging the revisional order dated 28.11.2013, the appellate order dated 07.07.2011 as well as the order-in-original dated 30.12.2009.

(ii) The petitioner is a company registered under the Companies Act and manufactures sugar at District Bahraich and is duly registered under the Central Excise Act. It is claimed that for the sugar season 2005-06, the petitioner had transferred and stored the following quantities of molasses in steel tank nos.1, 2 & 3:

	     Tank No.	 Quantity Stored (MT)	   Period of storage
 
	      1		         7705.00		             13.12.05 to 04.08.06
 
	      2		       12877.00		             12.11.05 to 28.11.06
 
	      3		         2671.00		            01.04.06 to 07.08.06
 

 

(iii) It is claimed that at the end of the season it was ascertained that there was a storage loss of 135.37 MT, 169.6 MT and 31.11 MT, which was approximately 1.76%, 1.53% and 1.16 % of the total quantity stored in the steel tank nos.1, 2 & 3. The petitioner filed an application on 29.11.2006 claiming remission of duty under Rule 21 of the Central Excise Rules. The petitioner was served with a show-cause notice dated 08.07.2007 proposing to reject the remission application mainly on the ground that the demand application has been filed only to enjoy the benefit of Board Circular dated 06.02.1982 without following the procedure of intimating the Range Officer within 24 hours mainly on the basis of trade notice. The said notice was issued alleging willful suppression of goods with an intent to evade payment of duty and proposes to invoke the extended period of limitation.

(iv) The petitioner filed a reply denying the allegations levelled against him and also requested for dropping the proceedings. It was also informed that the molasses are under the physical control of the State Excise Department and the losses were within the prescribed limit of 2%. He also placed reliance upon Circular No.261/15-cc/1/80-CX8 dated 06.02.1982 and 261/15/82/CE dated 18.07.1983. The Additional Excise Commissioner vide order dated 30.12.2009 rejected the remission application and proceeded to confirm the demand of Rs.2,77,787/- with equal penalty under rule 25 of the Central Excise Rules.

(v) Aggrieved against the said order the petitioner preferred an appeal before the Commissioner (Appeals), which too was dismissed on 07.07.2011. Aggrieved against the said order, the petitioner preferred a revision under Section 35EE of the Central Excise Act, which was partly allowed and the penalty was reduced to Rs.10,000/-, however, the demand on excise duty of Rs.2,77,787/- was confirmed.

5. Heard learned counsel for the petitioners in all the three writ petitions and Shri Dipak Seth, learned counsel who appears on behalf of the respondents.

6. Before proceeding to consider the individual cases, the scheme of the Central Excise Act (for short ''the Act') needs to be reproduced. Central excise duty is leviable by virtue of the Act enacted by the Central Government by virtue of its power from Entry No.84 of the List - I of the Seventh Schedule read with Article 246 of the Constitution of India. Section 3 of the Act is the charging section which prescribes for levy of central excise duty on manufacture, which is to be levied and collected in the manner as may be prescribed; although the excise duty is leviable on manufacture, the same is payable on removal of the goods in terms of the procedure prescribed at the time of clearance as per Rule 8 of the Central Excise Rules (for short ''the Rules'). The duty is payable on manufacture which is defined under Section 2F of the Act. Although the word "goods" has not been defined under the Act, however, the same has been interpreted by the Hon'ble Supreme Court in the case of Union of India v. Delhi Cloth and General Mills Co. Ltd. [1977 (1) ELT J 199 (SC)] to define that the article can be called goods if it is known to the market as such and can ordinarily come to the market for being brought and sold or is being capable of being sold.

7. Rule 4 & 8 of the Rules provides for manner of payment of the central excise duty which is to be paid when the goods are removed from the factory or the warehouse. Rule 4(2) provides for payment of duty in respect of molasses wherein a deeming fiction has been incorporated for payment as if the same has been produced by the procurer of the molasses. Rule 21 of the Rules specifically provides for remission of duty and confers power on the authorities to grant the remission upon them being satisfied that the goods have been lost or destroyed by natural causes or unavoidable accident or are claimed by the manufacturer as unfit for consumption or for marketing at any time before removal.

8. For the purposes of the present case, Rule 4, 8 and 21 are being quoted hereinbelow:

RULE 4. Duty payable on removal. - (1) Every person who produces or manufactures any excisable goods, or who stores such goods in a warehouse, shall pay the duty leviable on such goods in the manner provided in rule 8 or under any other law, and no excisable goods, on which any duty is payable, shall be removed without payment of duty from any place, where they are produced or manufactured, or from a warehouse, unless otherwise provided:

(1A) Notwithstanding anything contained in sub-rule (1), every person who gets the goods, falling under Chapter 61 or 62 or 63 of the First Schedule to the Tariff Act, produced or manufactured on his account on job work, shall pay the duty leviable on such goods, at such time and in such manner as is provided under these rules, as if such goods have been manufactured by such person:

Provided that where any person had, instead of paying duty, authorized job worker to pay the duty leviable on goods manufactured in his behalf under the provisions of sub-rule (1A) as it stood prior to the publication of this notification, he shall be allowed to obtain registration and comply with the provisions of these rules within a period of thirty days from the date of publication of this notification­ in the Official Gazette.

(2) Notwithstanding anything contained in sub-rule (1), where molasses are produced in a khandsari sugar factory, the person who procures such molasses, whether directly from such factory or otherwise, for use in the manufacture of any commodity, whether or not excisable, shall pay the duty leviable on such molasses, in the same manner as if such molasses have been produced by the procurer.

(3)* * *

(4) Notwithstanding anything contained in sub-rule (1), Principal Commissioner or Commissioner, as the case may be may, in exceptional circumstances having regard to the nature of the goods and shortage of storage space at the premises of the manufacturer where the goods are made, permit a manufacturer to store his goods in any other place outside such premises, without payment of duty subject to such conditions as he may specify.

RULE 8. Manner of payment.-(1) The duty on the goods removed from the factory or the warehouse during a month shall be paid by the 6th day of the following month, if the duty is paid electronically through internet banking and by the 5th day of the following month, in any other case:

Provided that in case of goods removed during the month of March, the duty shall be paid by the 31st day of March:

Provided further that where an assessee is eligible to avail of the exemption under a notification based on the value of clearances in a financial year, the duty on goods cleared during a quarter of the financial year shall be paid by the 6th day of the month following that quarter, if the duty is paid electronically through internet banking and in any other case, by the 5th day of the month following that quarter, except in case of goods removed during the last quarter, starting from the 1st day of January and ending on the 31st day of March, for which the duty shall be paid by the 31st day of March.

Explanation-1.- For the removal of doubts, it is hereby clarified that. -

(a) * * *

(b) an assessee, shall be eligible, if his aggregate value of clearances of all excisable goods for home consumption in the preceding financial year, computed in the manner specified in the said notification, did not exceed rupees four hundred lakhs.

Explanation-2. The manner of payment as specified in this proviso shall be available to the assessee for the whole of the financial year.

[ * * *]

Explanation. For the purposes of this rule -

(a) the duty liability shall be deemed to have been discharged only if the amount payable is credited to the account of the Central Government by the specified date;

(b) if the assessee deposits the duty by cheque, the date of presentation of the cheque in the bank designated by the Central Board of Excise and Customs for this purpose shall be deemed to be the date on which the duty has been paid subject to realization of that cheque.

(1A) Notwithstanding anything contained in sub-rule (1), the duty on the clearances in the month of November, 2015, by an assessee in the "State of Tamil Nadu and the Union Territory of Puducherry (except Yanam and Mahe)], payable by the 5th or the 6th of the December, 2015, as the case may be, shall be paid by the 20th December, 2015:

Provided that where an assessee in the State of Gujarat is availing of the exemption under a notification based on the value of clearances in a financial year, the duty on goods cleared during the month of February, 2002 shall be paid by the 31st March, 2002.

Explanation. For removal of doubts, it is hereby clarified that the duty liability shall be deemed to have been discharged only if the amount payable is credited to the account of the Central Government by the specified date:

(1B) Every assessee shall electronically pay duty through internet banking:

Provided that the Assistant Commissioner or the Deputy Commissioner of Central Excise, for reasons to be recorded in writing, allow an assessee payment of duty by any mode other than internet banking.

(2) The duty of excise shall be deemed to have been paid for the purposes of these rules on the excisable goods removed in the manner provided under sub-rule (1) and the credit of such duty allowed, as provided by or under any rule.

(3) If the assessee fails to pay the amount of duty by due date, he shall be liable to pay the outstanding amount along with interest at the rate specified by the Central Government vide notification under [section 11AA] of the Act on the outstanding amount, for the period starting with the first day after due date till the date of actual payment of the outstanding amount.

(3A) If the assessee fails to pay the duty declared as payable by him in the return within a period of one month from the due date, then the assessee is liable to pay the penalty at the rate of one per cent. on such amount of the duty not paid, for each month or part thereof calculated from the due date, for the period during which such failure continues.

Explanation. For the purposes of this sub-rule, 'month' means the period between two consecutive dates for payment of duty specified under sub-rule (1) or the first proviso to sub-rule (1), as the case may be.

(4) The provisions of section 11 of the Act shall be applicable for recovery of the duty as assessed under rule 6 and mentioned in the return filed under these rules, the interest under sub-rule (3) and penalty under sub-rule 3(A) in the same manner as they are applicable for recovery of any duty or other sums payable to Central Government.

Explanation. For the purposes of this rule, the expressions 'duty' or 'duty of excise' shall also include the amount payable in terms of the CENVAT Credit Rules, 2004.

RULE 21. Remission of duty. (1) Where it is shown to the satisfaction of the Principal Commissioner or Commissioner, as the case may be that goods have been lost or destroyed by natural causes or by unavoidable accident or are claimed by the manufacturer as unfit for consumption or for marketing, at any time before removal, he may remit the duty payable on such goods, subject to such conditions as may be imposed by him by order in writing:

Provided that where such duty does not exceed ten thousand rupees, the provisions of this rule shall have effect as if for the expression "Principal Commissioner or Commissioner, as the case may be", the expression "Superintendent of Central Excise" has been substituted:

Provided further that where such duty exceeds ten thousand rupees but does not exceed one lakh rupees, the provisions of this rule shall have effect as if for the expression "Principal Commissioner or Commissioner, as the case may be", the expression "Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be," has been substituted:

Provided also that where such duty exceeds one lakh rupees but does not exceed five lakh rupees, the provisions of this rule shall have effect as if for the expression "Principal Commissioner or Commissioner, as the case may be", the expression "Joint Commissioner of Central Excise or Additional Commissioner of Central Excise, as the case may be," has been substituted.

(2) The authority referred to in sub-rule (1) shall, within a period of three months from the date of receipt of an application, decide the remission of duty:

Provided that the period specified in this sub-rule may, on sufficient cause being shown and reasons to be recorded in writing, be extended by an authority next higher than the authority before whom the application for remission of duty is pending, for a further period not exceeding six months.

9. In case of non-payment of duty, specific powers have been conferred upon the authorities under Section 11A of the Act, which is as under:

SECTION 11A. Recovery of duties not levied or not paid or short-levied or short-paid or erroneously refunded. - (1) Where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, for any reason, other than the reason of fraud or collusion or any wilful mis-statement or suppression of facts or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty;-

(a) the Central Excise Officer shall, within two years from the relevant date, serve notice on the person chargeable with the duty which has not been so levied or paid or which has been so short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice;

(b) the person chargeable with duty may, before service of notice under clause (a), pay on the basis of, -

(i) his own ascertainment of such duty; or

(ii) the duty ascertained by the Central Excise Officer,

the amount of duty along with interest payable thereon under section 11AA.

(2) The person who has paid the duty under clause (b) of sub-section (1), shall inform the Central Excise Officer of such payment in writing, who, on receipt of such information, shall not serve any notice under clause (a) of that sub-section in respect of the duty so paid or any penalty leviable under the provisions of this Act or the rules made thereunder.

(3) Where the Central Excise Officer is of the opinion that the amount paid under clause (b) of sub-section (1) falls short of the amount actually payable, then, he shall proceed to issue the notice as provided for in clause (a) of that sub-section in respect of such amount which falls short of the amount actually payable in the manner specified under that sub-section and the period of two years shall be computed from the date of receipt of information under sub-section (2).

(4) Where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, by the reason of

(a) fraud; or

(b) collusion; or

(c) any wilful mis-statement; or

(d) suppression of facts; or

(e) contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty,

by any person chargeable with the duty, the Central Excise Officer shall, within five years from the relevant date, serve notice on such person requiring him to show cause why he should not pay the amount specified in the notice along with interest payable thereon under section 11AA and a penalty equivalent to the duty specified in the notice.

(5) to (7) * * * *

(7A) Notwithstanding anything contained in sub-section (1) or sub-section (3) or sub-section (4). the Central Excise Officer may, serve, subsequent to any notice or notices served under any of those sub-sections, as the case may be, a statement, containing the details of duty of central excise not levied or paid or short-levied or short-paid or erroneously refunded for the subsequent period, on the person chargeable to duty of central excise, then, service of such statement shall be deemed to be service of notice on such person under the aforesaid sub-section (1) or sub-section (3) or sub-section (4) or sub-section (5), subject to the condition that the grounds relied upon for the subsequent period are the same as are mentioned in the earlier notice or notices.

(8) Where the service of notice is stayed by an order of a court or tribunal, the period of such stay shall be excluded in computing the period of two years referred to in clause (a) of sub-section (1) or five years referred to in sub-section (4), as the case may be.

(9) Where any appellate authority or tribunal or court concludes that the notice issued under sub-section (4) is not sustainable for the reason that the charges of fraud or collusion or any wilful mis-statement or suppression of facts or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty has not been established against the person to whom the notice was issued, the Central Excise Officer shall determine the duty of excise payable by such person for the period of two years deeming as if the notice were issued under clause (a) of sub-section (1).

(10) The Central Excise Officer shall, after allowing the concerned person an opportunity of being heard, and after considering the representation, if any, made by such person, determine the amount of duty of excise due from such person not being in excess of the amount specified in the notice.

(11) The Central Excise Officer shall determine the amount of duty of excise under sub-section (10) -

(a) within six months from the date of notice where it is possible to do so, in respect of cases falling under sub-section (1);

(b) within two years from the date of notice, where it is possible to do so, in respect of cases falling under sub-section (4)

(12) Where the appellate authority or tribunal or court modifies the amount of duty of excise determined by the Central Excise Officer under sub-section (10), then the amount of penalties and interest under this section shall stand modified accordingly, taking into account the amount of duty of excise so modified.

(13) Where the amount as modified by the appellate authority or tribunal or court is more than the amount determined under sub-section (10) by the Central Excise Officer, the time within which the interest or penalty is payable under this Act shall be counted from the date of the order of the appellate authority or tribunal or court in respect of such increased amount.

(14) Where an order determining the duty of excise is passed by the Central Excise Officer under this section, the person liable to pay the said duty of excise shall pay the amount so determined along with the interest due on such amount whether or not the amount of interest is specified separately.

(15) The provisions of sub-sections (1) to (14) shall apply, mutatis mutandis, to the recovery of interest where interest payable has not been paid or part paid or erroneously refunded.

(16) The provisions of this section shall not apply to a case where the liability of duty not paid or short-paid is self-assessed and declared as duty, payable by the assessee in the periodic returns filed by him, and in such case, recovery of non-payment or short-payment of duty shall be made in such manner as may be prescribed.

Explanation 1.-For the purposes of this section and section 11AC,-

(a) "refund" includes rebate of duty of excise on excisable goods exported out of India or on excisable materials used in the manufacture of goods which are exported out of India;

(b) " relevant date", means, -

(i) in the case of excisable goods on which duty of excise has not been levied or paid or has been short-levied or short-paid, and no periodical return as required by the provisions of this Act has been filed, the last date on which such return is required to be filed under this Act and the rules made thereunder;

(ii) in the case of excisable goods on which duty of excise has not been levied or paid or has been short-levied or short-paid and the return has been filed, the date on which such return has been filed;

(iii) in any other case, the date on which duty of excise is required to be paid under this Act or the rules made thereunder;

(iv) in a case where duty of excise is provisionally assessed under this Act or the rules made thereunder, the date of adjustment of duty after the final assessment thereof;

(v) in the case of excisable goods on which duty of excise has been erroneously refunded, the date of such refund;

(vi) in the case where only interest is to be recovered, the date of payment of duty to which such interest relates.

Explanation 2.- For the removal of doubts, it is hereby declared that any non-levy, short-levy, non payment, short-payment or erroneous refund where no show cause notice has been issued before the date on which the Finance Bill, 2015 receives the assent of the President, shall be governed by the provisions of section 11A as amended by the Finance Act, 2015.

10. Section 11AB of the Act provides for payment of interest and Rule 25 Specifically confers power for confiscation and penalty. Rule 25 is quoted hereinbelow:

RULE 25. Confiscation and penalty. - (1) Subject to the provisions of section 11AC of the Act, if any producer, manufacturer, registered person of a warehouse or an importer who issues an invoice on which CENVAT credit can be taken or a registered dealer, -

(a) removes any excisable goods in contravention of any of the provisions of these rules or the notifications issued under these rules; or

(b) does not account for any excisable goods produced or manufactured or stored by him; or

(c) engages in the manufacture, production or storage of any excisable goods without having applied for the registration certificate required under section 6 of the Act; or

(d) contravenes any of the provisions of these rules or the notifications issued under these rules with intent to evade payment of duty,

then, all such goods shall be liable to confiscation and the producer or manufacturer or registered person of the warehouse or an importer who issues an invoice on which CENVAT credit can be taken or a registered dealer, as the case may be, shall be liable to a penalty not exceeding the duty on the excisable goods in respect of which any contravention of the nature referred to in clause (a) or clause (b) or clause (c) or clause (d) has been committed, or five thousand rupees, whichever is greater.

(2) An order under sub-rule (1) shall be issued by the Central Excise Officer, following the principles of natural justice.

11. It is also relevant to notice that Section 37B of the Act confers the power upon the Central Board of Excise and Customs constituted under the Central Boards of Revenue Act to issue directions for uniformity in the classification of excisable goods or with respect of levy of excess duties.

12. In the backdrop of the facts as narrated above and the provisions of law as quoted hereinabove, I proceed to decide the lis as arises from Writ - C No.1000920 of 2012 wherein the request of the petitioner for grant of remission under Rule 21 of the Rules has been rejected on the ground that the application was not filed within the prescribed period of 24 hours as prescribed in Trade Notice No.29/2003. All the three orders passed against the petitioner and impugned herein are solely based upon there being no application filed within the time prescribed. The said issue was dealt with by the Tribunal in its judgment in the case of Ramala Sahkari Chini Mills Ltd. U.P. v. Commissioner Central Excise, Meerut reported in 2007 (213) ELT 361 (Tribunal - Delhi) wherein the scope of the trade notice was considered by the tribunal and the tribunal was of the view that the procedural requirement as provided by the trade notice cannot override or delimit the operation of the statutory rules. It also recorded that Rule 21 of the Rules does not prescribe for any time limit for intimation of the losses. After holding the said, the Tribunal was pleased to allow the appeal filed by the assessee therein. The said order of the Tribunal has not been challenged and has been followed in number of judgments of the Tribunal. The department, clearly cannot take stand on an issue which has attained finality and thus, the argument of the counsel for the department on that count is not acceptable.

13. It is on record that the petitioner was served with a show-cause notice under Section 11A of the Act claiming the payment of duty and interest under Section 11AB of the Act to which a Defense Reply was submitted. It was incumbent upon the Central Excise Authorities to have considered the documents submitted by the petitioner alongwith his defense reply including the fact that the sugar mill of the petitioner was under the control of the State Authorities and of the Central Excise Authorities. There is no denial of the fact that the remission claimed by the petitioner was within the prescribed limit of 2% for remission of duty.

14. It is also relevant to note that for the E.R.1 forms submitted by the petitioner for the months of May 2007, September 2007 and November 2007, the show-cause notice was served on 03.03.2008; clearly in respect of the demand for the month of May, 2007, the show-cause notice was beyond the prescribed period of limitation of six months (as existed then) without there being any specific averment to attract the proviso to Section 11A of the Act that the short-payment of the duty was by fraud or collusion or any wilful misstatement or suppression of facts or contravention of any of the provisions of this Act or of the Rules made thereunder. It is well settled that without there being a foundation to invoke a larger period of limitation as provided in the proviso to Section 11A of the Act, no orders can be passed thereupon. Even otherwise in the present case, the fact with regard to the accident was well within the knowledge of State Authorities and there was no reason for the Central Excise Authorities to have denied the benefit of remission of duty as claimed by the petitioner under Rule 21. That being the case coupled with the fact that there was no specific allegation in the show-cause notice that the assessee had not paid the duty, the orders impugned being order dated 14.10.2011 (Annexure - 1), the appellate order dated 25.02.2009 (Annexure - 11) as well as the order-in-original dated 17.09.2008 (Annexure - 9) are clearly not sustainable and are set aside.

15. Dealing with the issue arising out of Writ - C No.1002298 of 2012: the issue for which the writ petition is filed is that for the sugar/residue-in-progress remained in the machine, which is commonly known as ''brown sugar' and is prohibited for marketing due to high content of molasses and other impurities, a demand - cum - show cause notice dated 21.11.2006 was issued on the said 1201 qntls. of brown sugar.

16. It is well settled that central excise duty is payable on manufacture; although the word ''goods' has not been defined under the Act, it is well settled by the Hon'ble Supreme Court that for the article to be considered as ''goods', the same must be something which can ordinarily come to the market to be bought and sold. Once the goods are not marketable, they are not liable to duty. In the present case there is no material to allege or establish that the brown sugar was marketable and once there is no foundation to hold that brown sugar, on which the remission was claimed, was marketable goods, no question of payment of duty arises. Even otherwise, no allegation was levelled in the show-cause notice with regard to clandestine removal, which was required to be established while raising a demand under Section 11A of the Act. In any event, the show-cause notice was issued beyond the prescribed period of limitation and there was nothing on record to demonstrate that non-payment was attributed on account of suppression of facts or fraud or willful misstatement or collusion or contravention of any of the provisions of the act or the rules made thereunder. There being no such foundation in the show-cause notice nor has any finding been returned with respect to invocation of extended period of limitation, the impugned orders being order dated 29.12.2011 (Annexure - 1), orders-in-Appeal dated 22.12.2009 (Annexures - 13 & 14) as well as the orders-in-original dated 08.04.2009 and 06.04.2009 (Annexures - 8 & 9) are clearly not sustainable and are set aside.

17. Coming to the case of Writ - C No.1001095 of 2014, the show-cause notice was served to the petitioner therein calling upon the petitioner to show-cause as to why the application for remission may not be rejected mainly on the ground that no intimation was given to the Range Officer within 24 hours as prescribed in the Trade Notice. The foundation for passing the impugned orders against the petitioner was that the intimation was not given within the prescribed period of the trade notice i.e. 24 hours. I have already held hereinabove that the said issue is covered by the judgment of the Tribunal in the case of Ramala Sahkari Chini Mills Ltd. (supra), which issue has attained finality. Even otherwise, the claim of the petitioner was well within the prescribed limit of being less than 2%. Thus, there being no material to allege against the petitioner that there was any evasion of duty, the impugned orders being order dated 28.11.2013 (Annexure - 6), the appellate order dated 07.07.2011 (Annexure - 5) as well as the order-in-original dated 30.12.2009 (Annexure - 4) are not sustainable and are set aside.

18. All the three writ petitions being Writ - C No.1000920 of 2012, Writ - C No.1002298 of 2012 & Writ - C No. 1001095 of 2014 are allowed in above terms.

Order Date :- 22.08.2022 [Pankaj Bhatia, J.]

nishant