2006 (2) TMI 57 - AT - Central Excise

Duty Liability Matter whether to examine whether duty liability accrue on the recipient appellants or the dispatching company - After considering all the details authority decided the liability is correctly fixed on the appellants

Summary

Issues: Duty liability on recipient appellants or dispatching company, interpretation of exemption notification, duty liability in case of duty-free items

The appeal was filed against Order-in-Appeal passed by the Commissioner of Customs & Central Excise (Appeals), Trivandrum. The impugned order was based on a Final Order by CEGAT, which remanded the matter to determine duty liability on the recipient appellants or the dispatching company, following the decision in Beehive Foundry Engineering Works v. CCE, Madras [1997 (93) E.L.T. 490 (T)]. The Original Authority decided duty liability based on this case law, which was upheld by the Commissioner (Appeals). The appellant, a 100% EOU engaged in software development and export, received duty-free furniture based on a CT3 certificate. However, it was later found that the items were not entitled to the benefit of Notification No. 123/81. Consequently, a demand was confirmed, leading to the matter being remanded for de novo adjudication by CEGAT Bangalore.

During the proceedings, the appellant argued that duty liability should not be fixed on them as they received the items based on a CT3 certificate issued by the department. However, the Tribunal noted that if the items were not entitled to the exemption notification, the appellant should not have received them without paying central excise duty. As excise duty is an indirect tax, the duty burden is typically borne by the purchaser, and in this case, the purchaser cannot use duty-free goods not covered by the exemption. Therefore, the duty liability was correctly fixed on the appellants. The Tribunal upheld the impugned order of the Commissioner (Appeals) and dismissed the appeal, emphasizing that the duty liability issue was straightforward and based on the legal principles outlined in the CEGAT's Order and relevant case law.

In conclusion, the Tribunal's decision affirmed the duty liability on the appellant for receiving items not entitled to exemption, highlighting the principle that duty-free goods cannot be utilized when they do not fall under the specified exemption. The judgment underscored the indirect nature of excise duty and the obligation of the purchaser to bear the duty burden, ultimately upholding the impugned order and dismissing the appeal.