2005 (9) TMI 459 - AT - Central Excise

Summary

Issues:
1. Duty liability of a 100% EOU on waste destroyed under supervision of Revenue officers.

Analysis:
The case involved an appeal by the Revenue against an Order-in-Appeal (O-I-A) regarding the duty liability of a 100% Export Oriented Unit (EOU) on waste arising from the manufacture of spliced wood veneers. The Commissioner (Appeals) noted that as per the proviso to sub-section (1) of Section 3 of the Central Excise (CE) Act, duty is required to be paid if goods are removed for sale in the Domestic Tariff Area (DTA). However, since there was no removal of goods from the factory for sale in the DTA, the provision was not violated. The Commissioner also observed that the lower authority did not establish that the manufactured product was excisable and chargeable to duty under a specific heading of the Excise Duty Tariff. As there was no heading or sub-heading under the CE Tariff to cover the product, the O-I-A was set aside.

The Appellate Tribunal, after hearing the Senior Departmental Representative (SDR) and noting the absence of the respondents, found the Revenue's argument groundless. The Tribunal agreed with the Commissioner (Appeals) that since there was no clearance of excisable goods in the DTA, the duty payment obligation did not arise. The waste was destroyed under the supervision of Revenue officers, and the Revenue's attempt to demand duty years later, despite the absence of any removal, was deemed without merit. Consequently, the appeal was rejected, affirming the decision of the Commissioner (Appeals).

In conclusion, the Tribunal upheld the Commissioner (Appeals)'s decision that the duty liability did not apply in this case due to the absence of goods clearance in the DTA and the lack of evidence establishing the waste as an excisable product chargeable to duty under the CE Tariff. The Tribunal emphasized that duty payment obligations are contingent on the actual removal of goods for sale, which was not the scenario in this instance.