2003 (6) TMI 305 - AT - Central Excise

Summary

Issues:
1. Duty demand on Polyester Staple Fibre (PSF) procurement without payment of Central Excise duty.
2. Time-barred demand due to permission by Assistant Commissioner.
3. Contention regarding duty liability only on the manufacturer, not the purchaser.
4. Verification of records under DEEC Scheme for fulfilling export obligations.
5. Demand based on Rule 9(2) of the Central Excise Rules on a non-manufacturer.

Analysis:

1. The appeal addressed the duty demand on the procurement of Polyester Staple Fibre (PSF) without payment of Central Excise duty. The appellant had been exporting fabrics and availing duty exemption benefits. The dispute arose when the Commissioner alleged that the appellant procured PSF without paying duty, leading to a demand for duty payment and imposition of a penalty.

2. The appellant argued that the demand was time-barred as it was under permission from the Assistant Commissioner until cancellation. Additionally, previous show cause notices had highlighted a backlog of replenishment benefits, indicating that duty liability should be determined based on exports and benefits received under relevant notifications.

3. Another contention was that the duty on PSF should be claimed from the manufacturer, Reliance Industries Ltd., and not from the purchaser, the appellant. This argument aimed to shift the duty liability away from the appellant as a purchaser of the raw material.

4. The appellant emphasized the need for a proper verification of records under the Duty Entitlement Pass Book (DEEC) Scheme to demonstrate fulfillment of export obligations. The failure to produce evidence regarding the duty status of PSF used in exported fabrics was a key point of contention.

5. The demand under Rule 9(2) of the Central Excise Rules on the appellant, who was not the manufacturer of the PSF, was deemed legally incorrect. The duty was demanded on the appellant despite the PSF being manufactured by Reliance Industries Ltd. This discrepancy highlighted a legal flaw in the duty demand process.

In conclusion, the Appellate Tribunal set aside the impugned order, allowing the appeal with consequential relief. The judgment provided a detailed analysis of the issues surrounding duty demand on PSF procurement, time-barred demands, duty liability, verification under the DEEC Scheme, and the legal basis for demanding duty on a non-manufacturer under Rule 9(2) of the Central Excise Rules.