2007 (6) TMI 100 - AT - Central Excise

Demand and penalty - Revenue contended that appellant had not discharged their duty liability in accordance with Section 4(a)(b)of the CEA,1944 and accordingly demand were made along with interest and penalty - Held that contention was correct and demand ,interest and penalty sustained

Summary

Issues involved:
- Duty liability on goods cleared through consignment agents
- Applicability of Section 4(1)(b) of the Central Excise Act
- Interpretation of Central Excise Valuation Rules
- Contradictory orders by the Commissioner (Appeals)
- Invocation of extended period for demanding duty
- Assessment of penalties and interest

Analysis:
The case involves appeals against Orders-in-Appeal passed by the Commissioner of Central Excise (Appeals), Hyderabad, regarding the duty liability on goods cleared through consignment agents. The appellants, M/s. Neeraj Pipes Pvt. Ltd. and M/s. Hariom Metal Tubes Pvt. Ltd., faced demands for Central Excise Duty, Education Cess, interest, and penalties. The main contention raised was the interpretation of Section 4(1)(b) of the Central Excise Act, which requires valuation rules to be adopted when goods are not sold from the factory gate. The Tribunal analyzed the legal position, emphasizing that even before the amendment defining consignment agents' premises as the place of removal, duty liability falls under Section 4(1)(b) necessitating the application of Central Excise Valuation Rules, specifically Rule 7.

The learned Consultant for the appellants cited precedents to support their argument, including a decision by the Commissioner (Appeals) in a related case. However, the Tribunal found the Commissioner's contradictory orders on the same day perplexing but upheld the legal position outlined in Section 4 and Rule 7. Despite the absence of factory gate sales, the appellants undervalued goods cleared through consignment agents, leading to the confirmation of the differential duty demand for both appeals. The Tribunal modified the penalties imposed, reducing them significantly for both appellants under Section 11AC, while setting aside a specific penalty under Rule 25. The demand for interest was confirmed, and the appeals were disposed of accordingly.

In conclusion, the Tribunal affirmed the duty liability under Section 4(1)(b) and the application of Central Excise Valuation Rules for goods cleared through consignment agents. The inconsistent orders by the Commissioner (Appeals) did not alter the legal position established by the Tribunal, leading to the confirmation of the duty demands with modified penalties and interest.