2005 (1) TMI 489 - AT - Central Excise

Summary

Issues: Duty liability on returned goods, Time extension for export, Procedural lapse in decision-making, Time-barred demand

Duty liability on returned goods:
The case involved the Appellant, engaged in manufacturing Tyre Flaps, who exported goods through Merchant Exporters but received the goods back in the factory due to the Exporter's failure to export within the stipulated period. The Appellant informed the department and sought permission for the return of goods. The Superintendent verified the returned goods, and the Appellant applied for an extension of time for removal. The Commissioner failed to decide on the extension application. The Appellant argued that duty is payable only upon removal of goods and that the extension should have been granted. The Tribunal found that the Appellant complied with Central Excise Rules, and since the goods were returned within the extended period, duty liability was not applicable until removal.

Time extension for export:
The Appellant contended that the Commissioner should have extended the period for return of goods, as the goods were received back within 18 months. The Tribunal agreed that the Commissioner should have granted the extension since the goods were returned within the specified timeframe under Rule 173M(1) of Central Excise Rules, 1944.

Procedural lapse in decision-making:
The Appellant argued that the Commissioner (Appeals) rejected the appeal based on the non-production of permission, which was not decided by the concerned Commissioner. The Appellant claimed this was a procedural lapse and that the appeal should be allowed. The Tribunal agreed that the Commissioner's failure to decide on the extension application constituted a procedural lapse, and the appeal was allowed on this ground.

Time-barred demand:
The Appellant raised the issue of the demand being time-barred, as the goods were received in the factory on 3-7-2000, but the show cause notice was issued on 20-3-2002. The Appellant argued that the demand was not maintainable due to the delay. The Tribunal found in favor of the Appellant, stating that the demand was time-barred, and consequently, the appeal was allowed with consequential benefits to the Appellant.

In conclusion, the Tribunal extended the period under Rule 173M(1) of Central Excise Rules, 1944, set aside the impugned order, and allowed the appeal in favor of the Appellant, providing relief from duty liability on the returned goods and addressing the procedural lapses and time-barred demand.