2007 (12) TMI 396 - AT - Central Excise

Summary

Issues:
1. Confiscation and redemption fine on non-duty paid goods found and seized from shop keepers.
2. Demand of duty from shop keepers.
3. Imposition of penalties on shop keepers.
4. Interpretation of Rule-7 and Rule-9(2) of the Central Excise Rules, 1944 regarding duty liability on excisable goods.
5. Applicability of judgments by the Hon'ble Supreme Court in similar cases.

Confiscation and Redemption Fine:
The three appeals by the Department stemmed from a common order of the Commissioner (Appeals) upholding the confiscation and redemption fine on non-duty paid goods found and seized from shop keepers. The Original Authority had confiscated the goods, allowed redemption on payment of fine, and demanded duty from the shop keepers. The Commissioner (Appeals) upheld the confiscation, fine, and penalties imposed on the shop keepers.

Demand of Duty:
The key contention revolved around the demand of duty from the shop keepers. The Commissioner (Appeals) set aside the duty demand on the basis that duty liability for excisable goods rests solely with the manufacturer-processor. Citing the judgment of the Hon'ble Supreme Court in the case of M/s. Ujagar Prints, the Commissioner held that duty cannot be demanded from the procurer or trader of excisable goods.

Imposition of Penalties:
While penalties were initially imposed on the shop keepers, the Commissioner (Appeals) differentiated between the penalty imposed on the shop keepers and the proprietor of the establishments. The penalty on the proprietor was set aside, emphasizing that duty liability does not extend to traders or procurers of excisable goods.

Interpretation of Central Excise Rules:
The Tribunal analyzed the provisions of Rule-7 and Rule-9(2) of the Central Excise Rules, 1944 to determine the extent of duty liability. It was established that as per these rules, only the manufacturer of the goods is liable for payment of Central Excise Duty. This interpretation formed the basis for setting aside the duty demand from the shop keepers.

Applicability of Supreme Court Judgments:
The Tribunal referred to previous judgments by the Hon'ble Supreme Court, including the Ujagar Prints case and the Empire Ind. Ltd. case, to support the position that duty liability for excisable goods is attributed to the manufacturer-processor, not to traders or procurers. The Tribunal upheld the Commissioner (Appeals)' decision in this regard, emphasizing that the duty cannot be demanded from shop keepers who merely supplied raw materials for processing.

In conclusion, the appeals by the Department seeking to restore the duty demand on the shop keepers were rejected, affirming the Commissioner (Appeals)' decision that duty liability for excisable goods lies with the manufacturer-processor, not with the traders or procurers.