ORDER
Archana Wadhwa, Member (J)
1. Being aggrieved with the order passed by the Commissioner (Appeals), the revenue has preferred the present appeal.
2. 1 have heard Shri P.K. Katiyar, ld. SDR appearing for the revenue and Shri T.C. Nair, ld. Consultant, appearing for the respondents.
3. The respondents has procured molasses from Sarangdhar Sugar Mills Ltd., on payment of duty and have availed the benefit of Modvat credit of said duty paid by the Khandsari Sugar Factory, where the molasses has been manufactured and cleared on payment of duty.
4. The revenue’s objection is that in terms of provisions of Rule 4(2) of Central Excise Rules, 2002, duty in respect of the molasses is required to be paid by the person, who procures such molasses. As such, they had contended that it is the appellants, who was under legal obligation to pay duty on the molasses. Accordingly, the original adjudicating authority confirmed the demand of duty of Rs. 2,49,876/- against the appellants and also imposed personal penalty of identical amount upon them along with confirmation of interest. Penalty of Rs. 5,000/- was imposed upon the Accounts Manager.
5. On appeal against the above order, the appellate authority set aside the impugned order by observing as under:
I find that molasses is a by product of a Khandsari unit. Main final product of the Khandsari sugar unit is “Khandsari Sugar” which is exempted from payment of Central Excise duty and so no registration is required for Khandsari sugar. However, molasses is excisable and dutiable final product on which duty is required to be paid. However, it appears that to escape the Khandsari sugar unit from taking Central Excise registration and following other formalities, burden of paying Central Excise duty on molasses cleared from a Khandsarr unit is shifted on the procurer of such molasses. However, the rule does not debar a Khandsari unit from paying duty on the molasses. In this case, the supplier unit is registered under Central Excise for manufacture of Khandsari sugar, molasses and candy sugar and have paid duty on molasses, while clearing the same from their factory under invoices issued under Rule 11 of Central Excise Rules, 2002, which is supplied to the appellant number 1 in this case and the duty is recovered from the appellant and credited to Govt. account by the supplier and the appellant has availed Cenvat credit against such invoices issued under Rule 11 of Central Excise Rules, 2002’under which Central Excise duty is paid by the supplier which is a valid document for availing Cenvat credit.
I find that there is no dispute that the Central Excise duty on the molasses in question paid by the supplier and recovered from the procurer who is appellant in this case. Yet the duty is again demanded from the appellant and is confirmed and adjusted against the amount of duty paid by the appellant under protest. It is a well settled principle that duty cannot be demanded twice on the same goods. Further, I observed that though the appellant has paid the duty twice on the same goods, yet the Cenvat credit is denied to them. I find that since the duty is already paid by the supplier no duty can be demanded against the same goods from the appellant and so also credit cannot be denied. The provisions of Rule 4(2) of Central Excise Rules, 2002 cannot be made applicable in this case. Further, I find that since the duty is already paid while clearing the goods, there is no contravention on part of the appellant number 1 and 2 and so they are not liable for any penalty.
6. On going through the above reasoning of the appellate authority, I find that admittedly the duty stands paid on the molasses. As such, confirmation of demand of duty again in respect of the same goods against the appellant is neither justified nor warranted. Reliance by the Revenue in terms of provisions of Rule 4(2) of Central Excise Rules cannot be pressed to service for demand of duty against the appellants for the second time, when there is no debarring clause on the processors of molasses to pay duty on the same at the time of clearance. The entire situation is revenue neutral. As such, I do not find any merits in the revenue’s case and reject the appeal.
(Pronounced in Court on 23-11-2006)