ORDER
M.V. Ravindran, Member (J)
1. This appeal is directed against Order-in-Appeal dated 5-1-04 which upheld the Order-in-Original vide which duty was confirmed, confiscation was ordered and penalty imposed on the appellant, but the redemption fine and penalty were reduced and set aside the duty demand.
2. The relevant fact that arise for consideration are the appellant are manufacturers of sugar and on 27th January, 2003 preferred an application seeking permission to store non-duty paid sugar in godown outside factory premises, as per the trade notice dated 29-10-2002 of Meerut Commissionerate. The office of the Commissioner of Central Excise, Meerut granted permission for storage of non-duty paid goods outside the factory premises, on 6th February 2003. Appellant handed over the said permission to the Office of the Deputy Commissioner on 7th February, 2003. Since the production of the sugar was in full swing and there was no storage space, appellant removed 8090 qntls. of sugar and stored it at the godown for which permission was granted to them. On 11 February, 2003 the bond with guarantee, as required under the trade notice were submitted and accepted by the lower authorities. Despite this, lower authorities issued a show cause notice to the appellant for confiscation of the goods seized by them which were stored outside the factory premises. The adjudicating authority confirmed the demand and confiscated the sugar and imposed penalty on the appellant. On an appeal, the Commissioner (Appeals) set aside the demand of the duty, and reduced the redemption fine and penalty imposed on the appellant but upheld the confiscation. Hence this appeal.
3. The authorized representative appearing for the appellant bring to my attention to the correspondence starting from 27th January, 2003 vide which they had sought the permission for storing 50,000 qntls. of sugar outside the factory premises. He brings to my notice despite the efforts to get the permission from the Office of Commissionerate earlier, they got the permission only on 6th February, 2003. It is his submission that faced with dilemma of whether to stop production or store the sugar outside the factory premises without executing bond with surety /guarantee, they opted for the second choice on 8th February and 9th February which were Saturday and Sunday. It is his contention that the Department having accepted the bond and guarantee should have not issued any show cause notice to them for seized goods stored outside the factory.
4. The learned DR reiterates the findings of the learned Commissioner (Appeals).
5. Considered the submissions made at length by both sides and perused records. It is not in dispute that the appellant moved an application seeking permission to store the goods outside the factory premises on 27th January, 2003. It is a common knowledge that the sugar factories run in season and during the seasons, the production requires to be stored and if there is shortage of storage place, in the factory premises, the sugar bags are stored outside the factory premises with prior permission. Despite this common knowledge, the Office of the Commissioner of the Central Excise, Meerut, took time to grant permission only on 6th February 2003. Having got the permission, the appellant submitted the copy of the permission to the office of the Deputy Commissioner Jurisdictional Division and stored the goods on 8th February and 9th February outside the factory premises due to emergency. On 10 February, 2003 the excise officers visited the godown and seized the goods, which was pursuant to the intimation given by the appellant in form of submission of the letter of permission dated 10th February 2003 intimating the need for urgent action for storing the goods outside the factory premises. It is also undisputed that the appellant had executed the bond along with bank guarantee which was accepted by the Office of the Deputy Commissioner vide his letter dated 11-2-2003.
6. I find that the letter of the Deputy Commissioner accepting the bond for storage of non-duty paid/sugar outside factory premises reads as under:
OFFICE OF THE DEPUTY COMMISSIONER CENTRAL EXCISE DIVISION: BAREILLY C. No. V(30)Misc/SF/03/2003/ Dt. 11-2-2003 To, M/s. Kisan Co-operative Sugar Factory Ltd., Majhola, Pilibhit D/Sir, Sub : Acceptance of Bond for storage of non-duty paid sugar reg.
Please refer to your letter C. No. Man/2002-03/5349 dt. 11.2.2003 vide which you have submitted a Bond in Annexure II for Rs. 42,50,000.00, along with Cash security of Rs. 10,00,000/- in the form of FDR issued by SBI, Majhola, as per the provisions of Trade Notice No. 21/2002 dt. 29-10-2002 issued by Commissioner Central Excise Meerut-I, read with permission granted by the Commissioner Central Excise Meerut-II on 6-2-2003 for outside storage of non-duty paid sugar.
Your aforesaid Bond has been accepted by the undersigned on 11-2-2003, which is entered at SI. No. 17 of the Bond Register of this Office.
It is once again reminded to you that the above permission for storage of non-duty paid sugar outside godowns is subject to strict observance of the Trade Notice No. 21 dt. 29-10-2002 of the Central Excise Commissioner-ate, Meerut.
Yours sincerely,
Sd/-
Deputy Commissioner
Central Excise Division
Bareilly.
7. From the plain reading of the above said letter, it can be gathered that the Deputy Commissioner had accepted the bond in pursuance to the permission granted by the office of the Commissioner on 6th February, 2003 to the appellant. If that be so, then the storage of the non-duty paying goods outside the factory premises cannot be considered as liable for confiscation.
8. The only reason for confiscation of the sugar stored outside by the appellant was that they had not followed the conditions laid down by the Trade Notice No. 21/CNT/2002 dated 29-10-2002 of Meerut, Commissioner. It will be important to read the conditions which are as under:
The permission granted in deserving cases will be subject to strict observation of the following formalities/procedure:
(a) That the outside godown where the non-duty paid sugar is to be stored should be under the physical control of Central Excise authorities in cost recovery basis and all receipts in and clearances from outside godown is effected under Excise Supervision.
(b) That the clearance of sugar should be on first in first out basis.
(c) That no losses of any nature in the outside godown will be permitted.
(d) That any left over stock of non-duty paid sugar lying in the outside godowns is first cleared.
(e) That the party gives any undertaking in writing that it should pay appropriate duty of excise in respect of all the sugar taken for reprocessing form the stocks stored in the said godowns and after reprocessing no refund of excise duty shall be claimed by the party of the resultant sugar.
(f) That the duty involved in respect of sugar transit and thereafter so stored outside should be secured by Bond (Specimen attached as Annexure-II) with 25% cash security subject to maximum of Rs. 10 lacs whichever is less and in case there is any pilferage/damage/loss of sugar restored, the assessee shall pay the duty involved thereon unconditionally.
(g) That for the movement of sugar from the factory premises to outside godown, procedure of ARE-3 (Annexure-25) and Invoice is followed very strictly.
(h) That proper accounts of sugar is maintained at the outside godown.
9. From the plain reading of the above conditions, it can be seen that the appellant is being charged for not following the conditions No. ‘({)’ as indicated in the trade notice. To my mind, the condition of executing the bond along with the bank guarantee is contemplated in the trade notice, to safeguard the interest of revenue. The intention of the trade notice, as it seems to me is that the appellant should execute the bond for goods stored outside which the appellant in this case has done so and the goods so stored in outside godown were tallying with the recorded balance.
10. I find that the permission granted by the Office of the Commissioner dated 6th February, 2003 is in itself enough to store the goods outside, and the appellant has executed the bond with guarantee post facto clearances, which is well within the guidelines issued by trade notice.
11. In view of the facts and circumstances, as mentioned above, since the appellant had correctly followed the procedure for storing the goods outside the factory premises, as contemplated, based on the permission granted by the Commissioner. The confiscation of the sugar bags is set aside. Since, the confiscation is set aside, consequent penalty imposed on the appellant for such confiscation is also liable to be set aside.
12. Accordingly, the impugned order of the Commissioner (Appeals) is liable to be set aside and I do so. Appeal allowed.