2005 (6) TMI 371 - AT - Central Excise

Summary

Issues:
1. Duty payment on removed goods and detention of dyed yarn stocks.
2. Entitlement to benefit of Notification No. 13/97 dated 11-4-97.
3. Time bar for duty demand and penalty under Section 11AC.

Analysis:

Issue 1: Duty payment on removed goods and detention of dyed yarn stocks
The case involved the detention of dyed yarn stocks and a subsequent demand for duty payment by the Assistant Commissioner. The appellant had a texturising machine separated from the yarn dyeing unit by a partition. The goods were removed during a specific period, leading to the detention of stocks and duty demand. The partition wall was later removed, and the texturising activity was stopped. The Assistant Commissioner ordered the release of detained goods but later demanded duty on the same goods, leading to a show cause notice being issued in 2001.

Issue 2: Entitlement to benefit of Notification No. 13/97 dated 11-4-97
The demand for duty was based on the grounds that goods sold during a particular period were not entitled to the benefit of Notification No. 13/97 dated 11-4-97. The appellant contested this, providing evidence such as the RG1 register copy and letters submitted prior to the relevant date. The appellant argued that on the date of removal, the unit did not have the facilities of both texturising and dyeing, thus should be entitled to the benefit of the notification.

Issue 3: Time bar for duty demand and penalty under Section 11AC
The Tribunal found that the duty demand and penalty under Section 11AC were time-barred as the issue was well within the knowledge of the department. It was emphasized that excise duty is to be collected at the rate prevalent on the date of clearance, and in this case, the notifications 4/97 and 19/97 applied. Consequently, the demand and penalty were set aside, and the appeals were allowed.

In conclusion, the Tribunal ruled in favor of the appellant, setting aside the demand and penalty on both merit and time bar grounds. The judgment highlighted the importance of applying the correct rate of duty based on the date of clearance and upheld the entitlement of the appellant to the benefit of the relevant notification.