2008 (6) TMI 410 - AT - Central Excise

Summary

Issues:
Jurisdiction of Commissioner to demand duty from consignee, Liability of consignor for duty payment on consignments not received, Interpretation of warehousing provisions under Central Excise Rules.

Analysis:
The case involved an appeal against the order of the Commissioner dated 26-4-04 regarding the movement of petroleum products without payment of duty under bond from refineries to warehouses. The issue arose when certain consignments despatched to an IOC warehouse were not received, leading to a duty demand of Rs. 3,84,02,373. The Commissioner demanded duty on the undelivered consignments, claiming the consignee had constructively received them. The appellant argued that action should only be initiated at the dispatching end, as the consignor had already paid the duty. The Tribunal noted that movements were covered by bonds executed by the consignor, with consignments moved under AR 3A documents without duty payment. The consignee was required to provide a re-warehousing certificate, and the consignor was liable for duty if the certificate confirming receipt was not received within 90 days. The Tribunal held that for consignments not physically received by the consignee, the duty liability remained with the consignor, and action should be taken by the consignor's officer, not the Commissioner of the consignee's jurisdiction.

The Tribunal found that the consignments in question were not physically received at the IOC warehouse in Bathinda, leading to the conclusion that the Commissioner of Ludhiana lacked jurisdiction to demand duty from the Bathinda warehouse. Noting that duty had been paid at the consignor's end, the Tribunal deemed the demand for interest and penalty on the Bathinda warehouse unjustified. Consequently, the Tribunal set aside the Commissioner's order and allowed the appeal, emphasizing the importance of correctly attributing duty liability based on the physical receipt of consignments and the obligations under the warehousing provisions of the Central Excise Rules.

This judgment clarifies the distinction between consignor and consignee responsibilities in cases of undelivered consignments under warehousing provisions. It underscores the necessity for proper documentation and physical receipt of goods to determine duty liability, highlighting the significance of adherence to procedural requirements outlined in the Central Excise Rules for movements under bond. The decision reaffirms the principle that duty payment obligations are tied to physical receipt, ensuring clarity in jurisdictional matters and preventing unjust demands on entities not responsible for the non-receipt of goods.