2012 (6) TMI 337 - AT - Central Excise

Stock transfer - rate of duty for the clearance of goods was increased from 4% to 8% - Waiver of pre-deposit of duty,interest and penalty - Held that - As per Rule 5 of the Central Excise Rules, 2002 rate of duty of excisable goods shall be the rate or value in force when such goods are removed from a factory - as the goods were removed prior to 7.7.2009 the applicant has a strong case for waiver - in favour of assessee.

Summary

Issues:
- Application for waiver of pre-deposit of duty, interest, and penalty based on the rate of duty for goods cleared on 'stock transfer' basis.
- Interpretation of Rule 5 of Central Excise Rules, 2002 regarding determination of duty rate at the time of removal from the factory.
- Dispute over whether the consignment agent's premises constitute a place of removal under Section 4 of the Central Excise Act, 1944.

Issue 1: Application for Waiver of Pre-deposit:
The applicant, engaged in manufacturing plastic ropes, sought waiver of pre-deposit of duty, interest, and penalty amounting to Rs.52,472. The dispute arose when certain quantities of goods were cleared on 'stock transfer' basis to a consignment agent before a duty rate increase from 4% to 8% on 07.07.2009. The Revenue contended that failure to discharge 8% duty for goods removed from the consignment agent's premises constituted short payment, justifying the demand. However, the applicant argued that duty determination should align with the rate in force at the time of removal from the factory, citing Rule 5 of the Central Excise Rules, 2002.

Issue 2: Interpretation of Rule 5 of Central Excise Rules, 2002:
The Tribunal analyzed Rule 5, which stipulates that the rate of duty for excisable goods should be based on the rate in force at the time of removal from the factory. Given that the goods were removed before the duty rate increase on 07.07.2009, the Tribunal found that the applicant had a strong case for waiver. Consequently, the Tribunal granted the waiver of pre-deposit of duty, interest, and penalty, staying the recovery during the appeal's pendency.

Issue 3: Consignment Agent's Premises as Place of Removal:
The crux of the dispute revolved around whether the consignment agent's premises could be considered a place of removal under Section 4 of the Central Excise Act, 1944. The Revenue argued that goods removed from the consignment agent without discharging the 8% duty should be treated as short payment, necessitating duty payment at the prevailing rate. However, the Tribunal's interpretation of Rule 5 favored the applicant, emphasizing the factory's role as the point of reference for duty determination, thereby supporting the waiver application.

In conclusion, the Tribunal, comprising S S Kang and Sahab Singh, granted the applicant's request for waiver of pre-deposit of duty, interest, and penalty, citing Rule 5 of the Central Excise Rules, 2002, and the timing of goods removal from the factory as decisive factors. The judgment highlighted the significance of aligning duty rates with the factory's removal time and underscored the factory's primacy in determining duty liabilities.