2015 (3) TMI 1152 - AT - Central Excise

Cancellation of registration certificate - Interest demand - place of removal - duty ought to have been paid on 17-12-2007 i.e. the date on which Central Excise registration was granted to Sri Chamundeshwari Sugars Ltd.- whether the goods can be deemed to have been removed on the date on which the factory premises were handed to Sri Chamundeshwari Sugars Ltd? - Held that - It cannot be said that there was deemed cancellation of registration certificate on 17-12-2007 and there was no deemed removal of sugar on the date of transfer and therefore there was no need for the appellants to pay duty before clearances and since they have paid the duty at the time of removal from the place of removal i.e. a portion of warehouse belonging to them, it has to be held that the demand for interest cannot be sustained. The departmental officers have failed to ensure that the registration certificate of the appellant was cancelled which invariably is done before a registration certificate is issued to the next person. In such cases invariably, the person who is surrendering the license or whose license is cancelled is required to pay all the arrears or pay duty on the goods. If they were to do so, the duty would have been collected on the date itself. Similarly if the appellants were to be aware of these provisions, they could have taken permission to store the goods elsewhere without payment of duty from the Commissioner explaining the peculiar circumstances and then also there could have been no problem. The Commissioner has the power to give permission to store the goods without payment of duty elsewhere. If the proper procedure was to be followed, duty would have been collected or permission would have been given for storage elsewhere keeping the fact in mind that the sugar manufactured by the appellant was to be cleared to the market only with the clearance of the concerned Government authority. However, have not been able to find legal provision which provides for enforcement of the demand made by the Revenue. - Decided in favour of assessee

Summary

Issues Involved:
1. Demand for interest on duty payment.
2. Deemed cancellation of registration.
3. Legality of two registration certificates for the same premises.
4. Proper accounting and clearance of goods from the warehouse.
5. Responsibility of departmental officers in ensuring proper registration procedures.

Detailed Analysis:

1. Demand for Interest on Duty Payment:
The appellant argued that duty was paid whenever sugar was cleared from the warehouse, complying with legal requirements. The department contended that duty should have been paid on the date the premises were leased to the new operator, Chamundeshwari Sugars Ltd. The tribunal concluded that since the duty was paid at the time of actual removal from the warehouse, the demand for interest could not be sustained.

2. Deemed Cancellation of Registration:
The appellant maintained that their registration was never formally cancelled, and there is no provision for deemed cancellation. The department argued that the issuance of a new registration certificate to Chamundeshwari Sugars Ltd. implied a deemed cancellation of the appellant's registration. The tribunal found no legal basis for deemed cancellation without formal action by the authorities.

3. Legality of Two Registration Certificates for the Same Premises:
The appellant cited a case where two registration certificates were allowed for the same premises. The department opposed this, claiming it was not legally permissible. The tribunal noted that there are no specific provisions in the law prohibiting two entities from operating from the same warehouse, provided proper stock accounting is maintained. The tribunal accepted the appellant's argument, citing the absence of legal provisions against such an arrangement.

4. Proper Accounting and Clearance of Goods from the Warehouse:
The appellant continued to file monthly returns and pay duty upon clearance, maintaining proper stock records. The tribunal emphasized that the place of removal can include a warehouse, and as long as proper accounting is maintained, there is no issue with two entities operating from the same warehouse. The tribunal found no evidence of stock mismanagement or improper clearance procedures.

5. Responsibility of Departmental Officers in Ensuring Proper Registration Procedures:
The tribunal criticized the departmental officers for not ensuring the cancellation of the appellant's registration before issuing a new one to Chamundeshwari Sugars Ltd. The tribunal highlighted that proper procedures were not followed, which could have avoided the dispute. The tribunal noted that the Commissioner has the authority to permit storage of goods without payment of duty, which was not utilized in this case.

Conclusion:
The tribunal allowed the appeal, ruling that there was no deemed cancellation of the appellant's registration, no deemed removal of goods on the date of transfer, and no basis for the demand for interest. The tribunal emphasized the need for proper procedures by departmental officers to avoid such disputes in the future. The appeal was allowed with consequential relief.