2014 (3) TMI 875 - AT - Central Excise

Duty demand - Date of clearance of goods - Lecithin was exempted till 28-2-2006 and became dutiable from 1-3-2006 with issuance Notification No. 21/2006, dated 1-3-2006, vide which earlier exemption Notification No. 115/75, dated 30-4-1975 was rescinded - Appellant sold Lecithin in February, 2006 by way of commercial invoice - However, it was actually cleared by them in the month of June and July, 2006 - Held that - rate of duty applicable to the excisable goods shall be the rate in force on the date when such goods are removed from the factory. Inasmuch as admittedly the said goods were removed from the factory in the month of June and July, 2006 when they attract duty, we are of the view that confirmation of demand of duty against the appellant is in accordance with law. Mere fact that the sales invoices were raised in February, 2006, when the goods were exempted, but no removal took place, by itself cannot be held to be shifting the date of removal to February, 2006. In terms of said Rule, it is the date of actual and physical removal of goods from the factory which has to be taken into consideration. As such, we find no possible ground to interfere in the order of the authorities below - Penalty set aside - Decided partly in favour of assessee.

Summary

Issues:
1. Whether the clearance of Lecithin in June and July 2006 attracts duty despite sales invoices being raised in February 2006.
2. Imposition of penalty under Section 11AC of the Central Excise Act and Rule 25 of Central Excise Rules, 2002.

Analysis:
1. The appellant, engaged in manufacturing Lecithin, faced a dispute concerning the clearance of 26.03 MT of Lecithin. The appellant claimed that although the goods were sold in February 2006, they were actually cleared by the buyers in June and July 2006. The appellant argued that since the sales invoices were raised in February 2006 when the goods were exempted, no duty should be levied. However, the lower authorities relied on Rule 5 of the Central Excise Rules, which states that the rate of duty applicable is determined based on the date of actual removal of goods from the factory. As the goods were physically removed in June and July 2006 when duty was applicable, the demand for duty of Rs. 1,03,168/- was confirmed against the appellant. The Tribunal upheld this decision, emphasizing that the date of actual removal, not the invoice date, is crucial in determining duty liability.

2. Apart from confirming the duty demand, the lower authorities imposed a penalty under Section 11AC of the Central Excise Act and Rule 25 of Central Excise Rules, 2002. The penalty under Rule 25 was set aside by the Commissioner (Appeals). Regarding the penalty under Section 11AC, the Tribunal noted that since the issue involved a legal interpretation of the law and not suppression or clandestine clearance, no malice could be attributed to the appellant to warrant a penalty. Consequently, while upholding the duty demand, the Tribunal set aside the penalty of Rs. 1,03,168/- imposed under Section 11AC of the Act. The appeal was disposed of accordingly on 30-5-2012.