By TIOL News Service

ALLAHABAD, JUNE 09, 2015: THE appellant is manufacturer of sugar and molasses. Central Excise duty was demanded in respect of quantities of molasses found short. The explanation of the appellant was that the shortages were the result of natural losses and quantities involved are within the normal limit prescribed by the department itself (2%). They got a favourble order from the Tribunal = 2006-TIOL-1038-CESTAT-DEL and the revenue is in appeal before the High Court. The appeal was admitted on the substantial question of law which is as under:

"Whether the remission of duty involved on storage loss of molasses be allowed even without filing of remission application though prescribed specifically in the statute under Rule 21 of Central Excise Rules, 2002?"

It is the contention of the revenue that the circular which has been relied upon by the Tribunal only fixes the outer limit in the matter of treating the loss of the excisable goods as one within permissible, due to natural circumstances but the circular does not do away with the making of the mandatory application under Rule 21 of the Rules for waiving off/remission of the excise duty of the goods manufactured but lost due to natural circumstances.

The High Court, after referring to the Single Judge order by the same High Court in 2013-TIOL-889-HC-ALL-CX, (holding that remission application was not required) held:

We find it difficult to agree with the reasoning of the Hon'ble Single Judge, that limit of wastage permitted due to natural circumstances can be treated to be less production or as not having been manufactured. In our opinion the notification only prescribes outer limit up to which excisable goods can be said to have been lost in natural course, with reference to the particular good. Such prescription of the outer limit will not mean that the statutory provisions for claiming such remission are to be given a go by. It is not open to the assessee to himself determine the remission because of alleged loss even if it is within the permissible limits.

It is settled principle of law that if law requires something to be done in a particular manner it has to be done in that manner or not at all.

We have no hesitation to record that even if in the facts of the case, the assessee claims remission from excise duty of goods said to have been lost in natural course, within the permissible limit, as per the circulars, he has to follow the procedure prescribed under Rule 21 of the Rules. Only after an order is made granting remission in respect of the goods so lost due to natural circumstances, he could be exempted from payment of excise duty.

The Tribunal has not examined the aforesaid aspect of the matter while allowing the appeal filed by the assessee. The order of the Tribunal cannot be legally sustained and is hereby quashed. The matter is remanded to the Tribunal to decide afresh in the light of the observations.

(See 2015-TIOL-1415-HC-ALL-CX)