2007 (1) TMI 46 - AT - Central Excise

Duty liability Revenue contended that appellant are liable for duty on the goods manufactured as these are not used for specified purposes Adjudicating authority after considering the detail rejected the revenue contention and allow the appeal

Summary

Issues:
1. Appellant's liability for duty on goods cleared under Notification No. 76/88 for slide fasteners.
2. Interpretation of Chapter X of Central Excise Rules regarding duty payment.
3. Dispute between the appellant and Revenue regarding duty liability.

Analysis:
1. The appellant, engaged in manufacturing polyester monofilament yarn, cleared goods at a concessional rate of duty under Notification No. 76/88 for slide fasteners. The issue arose when the appellant was demanded duty for not producing a requisite warehousing certificate. The appellant contended that the recipient of goods is liable for duty if the goods are not used for specified purposes, as per Chapter X of Central Excise Rules.

2. The appellant argued that under Chapter X, the recipient must apply for a necessary certificate and furnish bonds to receive goods at a concessional rate of duty. If the goods are not used as specified, duty is payable as per Section 196 of the Rules. The appellant cleared goods against CT-2 certificates issued by Excise authorities, authorizing recipients to obtain goods at a concessional rate for specified purposes. The appellant maintained that Rule 173N, applicable to notified goods, did not apply in this case.

3. The Revenue contended that as the appellant cleared goods at a concessional rate, they were liable for duty as manufacturers, even if the goods were not used for specified purposes. However, the Tribunal found merit in the appellant's argument. Rule 192 of Chapter X requires applicants to furnish bonds to receive goods at a concessional rate, with Rule 196 stipulating duty payment if goods are not accounted for. The Tribunal held that duty liability for goods received under Chapter X procedure rested with the recipient who bound themselves to use the goods for the intended purpose as per the Notification.

4. Ultimately, the Tribunal set aside the demand on the manufacturer, allowing the appeal. The decision clarified that the recipient of the goods was liable for duty if the goods were not used as specified. The Revenue was directed to pursue action against the recipient. The appellants were granted any consequential relief as per the law. The judgment emphasized the importance of compliance with Chapter X procedures and the allocation of duty liability to the appropriate party.

Judgment Summary:
The Appellate Tribunal ruled in favor of the appellant, holding that duty liability for goods cleared under Notification No. 76/88 for slide fasteners rested with the recipient, not the manufacturer. The Tribunal emphasized compliance with Chapter X procedures and directed the Revenue to pursue action against the recipient for duty payment if goods were not used as specified. The appellant was granted consequential relief, and the demand on the manufacturer was set aside.