2011 (2) TMI 885 - AT - Central Excise

Waiver of Pre Deposit of Duty Interest & Penalties - Goods cleared under CT 3 certificates - .Revenue contended - Hollow profiles are not accessories for airconditioning equipments as the same are used only for supporting connecting system -.Held - In the present case, as the goods were removed under these rules for specified use and in case the goods were not used for the specified use, prima-facie, the recipient is liable to pay the duty. As the goods were cleared under CT-3 certificate and duly reflected in the statutory records, which were filed before the jurisdictional authorities, therefore, we find that applicant has strong case on limitation as well as merits. - Stay petitions are allowed.

Issues: Waiver of pre-deposit of duty, interpretation of Notification No. 22/2003-C.E., liability of manufacturer for duty payment, application of Central Excise Rules.

Analysis:

1. Waiver of Pre-deposit of Duty: The applicant sought waiver of pre-deposit of duty amounting to Rs. 79,46,941/-, interest, and penalties. The goods in question, G.I. Hollow profiles, were cleared under CT-3 certificate issued to a 100% EOU under Notification No. 22/2003-C.E. without payment of duty. The adjudicating authority confirmed the demand for duty, interest, and penalties, invoking the extended period of limitation due to alleged suppression with intent to evade payment of duty. The applicant argued that no suppression could be alleged as the goods were cleared under the CT-3 certificate issued to the EOU, and the duty liability shifts to the recipient if the goods are not used for the specified purpose as per the Central Excise Rules.

2. Interpretation of Notification No. 22/2003-C.E.: The Revenue contended that the G.I. Hollow profiles were not entitled to exemption under Notification No. 22/2003-C.E. as they were used only for supporting the connecting system and not as equipment or spares for air-conditioning systems. The Revenue relied on Rule 21 & 22 of the Central Excise Rules, stating that the duty liability falls on the manufacturer for warehoused goods. However, the applicant argued that the goods were cleared under the CT-3 certificate for the specified purpose and should not be considered liable for duty payment.

3. Liability of Manufacturer for Duty Payment: The Tribunal found that the applicant, a manufacturer of G.I. Hollow profiles, had cleared the goods under the CT-3 certificate issued by the proper officer to the 100% EOU, which duly received and re-warehoused the goods. As per the Central Excise Rules, the manufacturer is allowed to receive goods for a specified purpose at a concessional rate of duty, and if the goods are not used for the intended purpose, the recipient is liable to pay the duty. In this case, since the goods were removed under these rules for a specific use and were duly reflected in the statutory records, the Tribunal concluded that the applicant had a strong case on both limitation and merits, leading to the waiver of pre-deposit of duty, interest, and penalties.

4. Application of Central Excise Rules: The Tribunal emphasized that the Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001, govern the clearance of goods for specified purposes at concessional rates of duty. The proper officer ensures that the goods are used for the intended purpose, and if not, the manufacturer-recipient is liable to pay the duty. In this case, as the goods were cleared under the CT-3 certificate and met the requirements of the Rules, the Tribunal granted a waiver of pre-deposit and stayed the recovery of duty, interest, and penalties during the appeal process.

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