2014 (2) TMI 110 - AT - Central Excise

Remission of duty - goods destroyed in transit - Place of removal - Exports - Held that - it is also doubtful as to whether the definition of place of removal as given in section 4(3)(c) can be adopted for the purpose of Rule 21 of the Central Excise Rules, 2002 as in terms of section 4(3), the definitions of various terms given in this sub-section are for the purpose on this section i.e. section 4 which is applicable for determination of assessable value of the goods in respect of which there is ad-valorem rate of duty and which are not covered by section 3(2) or section 4A of the Act. The natural meaning of the expression at any time before removal is any time before the time of clearance of the goods from the factory. Decision of KUNTAL GRANITES LTD. Versus COMMISSIONER OF C. EX., BANGALORE 2007 (3) TMI 540 - CESTAT, BANGALORE is in favor of assessee. wherein it was held that, remission of duty would be admissible even in the cases where the goods are destroyed or lost in course of transit from the factory to the depots or to consignment agents premises or to the customer s premises in the case of FOR sales or are lost/destroyed or rendered unfit for marketing during storage at the depots or at Consignment Agents premises. Single member bench states that, I, therefore, have strong reservations about the correctness of this decision. - However, since the judgment in the case of Kuntal Granite Ltd. (Supra), is the judgment of a Devision Bench which is binding on a single bench, judicial discipline requires that this judgment must followed - Decided in favor of assessee.

Summary

Issues:
1. Interpretation of Rule 21 of the Central Excise Rules, 2002 regarding remission of duty for goods lost or destroyed before removal.
2. Determining the "place of removal" for goods cleared for export.
3. Application of precedents in similar cases to the current scenario.

Issue 1: Interpretation of Rule 21 of the Central Excise Rules, 2002:
The case involved a dispute regarding the remission of duty for goods destroyed before removal for export. The appellant argued that the destruction occurred before the goods were exported out of India, relying on precedents like Kuntal Granites Ltd. vs. CCE-2007. The respondent defended the Commissioner's decision, stating that the "time of removal" should be considered from the factory gate, not the export location. The judge analyzed Rule 21, emphasizing that the loss must occur before the "time of removal," which is defined as the time of clearance from the factory. The judge disagreed with the interpretation in Kuntal Granites Ltd., as it expanded the rule beyond its intended scope, potentially allowing remission in various scenarios. Despite reservations, the judge upheld the Division Bench's decision, following judicial discipline.

Issue 2: Determining the "place of removal" for goods cleared for export:
The appellant argued that the "place of removal" for goods cleared for export should be the port/airport where the goods are exported, not the factory. They cited precedents and definitions from the Central Excise Act to support their stance. In contrast, the respondent contended that the factory should be considered the place of removal, referencing a Central Government order in a similar case. The judge examined the definitions and rules, concluding that even if goods are exported out of India, the "time of removal" remains the factory clearance. The judge highlighted doubts about using the definition of "place of removal" from the Act for Rule 21 purposes, questioning the broader implications of such an interpretation.

Issue 3: Application of precedents in similar cases:
The judge acknowledged the binding nature of the Division Bench's judgment in Kuntal Granites Ltd., despite personal reservations. Following judicial discipline, the judge set aside the impugned order and allowed the appeal based on the precedent's application. The decision underscores the importance of adhering to established judgments within the legal framework, even when facing interpretational challenges.

This detailed analysis of the judgment provides insights into the legal interpretation of Rule 21, the determination of the place of removal, and the significance of precedent in shaping legal outcomes.