ORDER
K.K. Agarwal, Member (T)
1. The appellant in this case is engaged in the manufacture of sugar and were allotted export quota for export of sugar by the Director of Sugar, Ministry of Food, Govt. of India as per apportionment order received from time to time as per the provisions of Sugar Export Promotion Act, 1958. Once the quota is fixed by the Central Government in respect of particular factory, they are required to deliver the same to the sugar export agency nominated by the Government and to export sugar as per the direction of the export agency. Section 7 of the Sugar Export Promotion Act 1958, states that where sugar delivered falls short of the export quota fixed for a unit, then the quantity falling short shall be chargeable to duty of excise @ Rs. 41.50 per quintal. In the present case though the quota was fixed in respect of the appellant the export agency did not require them to deliver any quota but nevertheless issued a certificate stating that the appellant have fulfilled their export obligation and on enquiry by the Departmental officer as to how they have certified that the export obligation has been fulfilled they stated that they are empowered under Section 8 of the Act to themselves sell the sugar delivered to them in open market or permit others to sell the export quota sugar in the market and that the appellant had already paid the due export loss to them and therefore they were issued a certificate dated 7.1.1993 mentioning therein that the export obligation of the appellant was fulfilled for the period 1990-91, 1991-92 and 1992-93 and that on issue of this certificate the appellant became free to sell the export quota sugar in domestic market. The appellants were however issued a show cause notice stating that since they have not exported any sugar, the exemption from duty is not applicable to them and require them to pay additional duty amounting to Rs. 8,16,462/-. The demand was confirmed by the adjudicating authority and upheld by the Commissioner (Appeals).
2. The ld. Advocate for the appellant submits that once the export agency had issued a certificate stating that they have fulfilled the export obligation, which certificate is based on the fact that they have shared the export losses asked by the export agency and the export agency has the power to sell the sugar in the domestic market either itself or allowing other to sell in domestic market, duty cannot be demanded under Section 7. He referred to the decision of the Tribunal in the case of Terna Shetkari SSK reported in 2004 (177) ELT 159 wherein it was held that failure in export of sugar against allotted export quota cannot be questioned by Central Excise authorities without a corresponding advice from a designated authority under the said Act. He also invited attention to Rule 5 of the Sugar Export Promotion Rules, 1973 under which the export agency is the authority designated by the Central Govt. who has to notify the Central Excise officers regarding failure to deliver the export quota by the factory and it is on the basis of such intimation that the duty is required to be collected by the Central Excise Officers. In their case no such intimation has been received by the Central Excise authorities from the export agency. Attention was also invited to the Order-in-Original No. 26/CEX/2000 dated 25.04.2000 passed by Additional Commissioner in respect of M/s. Terna SSK Ltd. cited supra where in an identical situation the show cause notice was dropped by the Addl. Commissioner. Reference was also invited to the Order passed by the same Commissioner (Appeals) vide No. SVS/270/NGP-A/2007 dated 31.07.2007 wherein in almost similar circumstances in respect of sugar not delivered as per the export quota fixed, the Commissioner (Appeals) following CESTAT decision (cited supra) in the case of Terna Shetkari SSK has set aside the order of the lower authority and dropped the demand. The order of Addl. Commissioner to their knowledge has not so far been challenged.
3. Heard both sides.
4. I have considered the submission. I find that even though export quota has been fixed by the Central Govt. in respect of the appellant, there is no intimation from the designated authority i.e. export agency under Rule 5 intimating any failure to deliver export quota by the appellants. On the contrary there is a certificate from it stating that the appellant has fulfilled its export obligation which can be taken to mean that there has been no failure of delivery by the appellants in respect of export quota fixed for them. I also note that the Revenue itself has not challenged the order of the addl. Commissioner wherein in an identical circumstances, the demand was set aside. As the issue has already been decided by CESTAT in the case of Terna Shetkari SSK cited supra, following the same I allow the appeal and set aside the order of the Commissioner (Appeals).
(Dictated in Court)