2009 (11) TMI 641 - AT - Central Excise

Duty liability in relation to the goods still lying in the stock - held that - the factory is in legal existence though actual process of manufacture is not being conducted in the factory at present. - prima facie, it would not be permissible for the authority to insist for payment of duty in relation to such products at this stage. Retrospective amendment - Differential duty in relation to the product - clearance of inputs and capital goods - the inputs were procured prior to 1997, but they were disposed of after 1st April, 2000 and at the relevant time the provisions of Rule 57-AB were in force and not Rule 57F. - held that - Considering the law, as revealed from Section 131 of the Finance Act which introduced the amendment protecting the rights accrued and the liabilities incurred under the statutory ruling prevailing at the time of insertion of the amendment, obviously would disclose that, the legal provisions prevailing on the date of removal of the goods will have to be understood with reference to the dates on which the goods had been cleared and with reference to the provisions which were in force on such dates. Having so understood, the calculation made in that regard by the Commissioner in the impugned order, prima facie, does not appear to suffer from any infirmity. In that regard, no, prima facie, case has been made out for grant of stay of demand in that respect. - Pre-deposit ordered.

Summary

Issues:
Challenge to order confirming duty demand, interest, and penalty under Central Excise Rules, 1944; Interpretation of legal provisions regarding differential duty on removal of inputs and duty liability on goods in stock.

Analysis:
1. The appeal challenged an order confirming duty demand, interest, and penalty on the appellant under Central Excise Rules, 1944. The appellant contended that the Commissioner exceeded the scope of the remand order by imposing duty beyond what was justified. The Tribunal had previously found that the factory was legally existing despite not currently manufacturing goods. Duty calculation was to be based on prevailing legal provisions at the time of goods clearance.

2. Regarding the differential duty on removed goods, the appellant argued that Rule 57AB(1)(b) explanation should apply, requiring duty payment on inputs or capital goods as if manufactured in the factory. The Department cited a decision supporting the continuation of rights and liabilities under the rules prevailing when goods were procured. The Tribunal emphasized the importance of understanding legal provisions in force at the time of goods clearance.

3. Concerning duty liability on goods in stock, the appellant claimed entitlement to credit for duty paid on such goods until their removal. The Department contended that the appellant reported unit closure in 1999, questioning the continued availability of credit. The Tribunal noted the legal existence of the factory, indicating that duty liability would arise only upon goods removal.

4. The Tribunal found that the factory's legal existence, despite the lack of current manufacturing, prevented immediate duty payment on goods in stock. It emphasized the preservation of accrued rights and liabilities under previous rules. The calculation of duty demand in the impugned order was deemed appropriate, and no stay was granted on the demand. The appellant was directed to deposit a specified sum within a set period, with the balance amount due after considering the previous payment.

5. The Tribunal ordered the appellant to deposit a specific amount within a given timeframe, considering the facts and circumstances of the case. The appellant's compliance was scheduled for a future date, pending the deposit of the required sum. The application was disposed of accordingly, with the demand for the balance amount waived until the appeal's final disposal.

6. The judgment highlighted the importance of adhering to legal provisions prevailing at the time of goods clearance and the preservation of rights and liabilities under previous rules. The appellant was directed to comply with the deposit requirements, ensuring necessary credit for previous payments. The Tribunal's decision aimed to balance the appellant's obligations with the preservation of legal principles.