2014 (10) TMI 15 - AT - Central Excise

Clearance of goods without payment of duty - Imposition of redemption fine and penalty - levy of Central Excise duty on readymade garments - Held that - The lower authorities have taken a view that because warehouse was a registered premises and the readymade garments were lying in the registered premises, the appellant could not have cleared them without payment of duty. In our opinion the fact that all the stock lying on 28-2-2011 had been received from their job workers under proper documents showing nil rate of duty, in terms of the clarification issued by the Board, the appellants may not be liable to pay tax again. Only if the goods had not been cleared under documents without payment of duty and was in the warehouse, then only said readymade garments would attract duty in terms of Board s instruction. In view of the assertion by the learned counsel that the goods in the warehouses on 28-2-2011 had actually been received from job workers under documents showing nil rate of duty and appellant was covered by the Board s instruction, we consider that appellant has a prima facie case in their favour - Matter remanded back - Decided in favour of assessee.

Issues:
1. Liability to pay central excise duty on readymade garments cleared without payment of duty.
2. Rejection of appeal due to failure to deposit ordered amount.
3. Interpretation of Rule 4 of CER, 2002 and relevant notifications.
4. Clarifications on levy of Central Excise duty on goods produced before 28-2-2011 but lying in stock.
5. Prima facie case in favor of the appellant regarding clearance of goods without payment of duty.
6. Remand of the matter to the Commissioner (Appeals) for hearing on merits without pre-deposit.

Analysis:

1. The case involved the liability of the appellant, a manufacturer of readymade garments, to pay central excise duty on goods cleared without payment of duty. The appellant was found liable for central excise duty on a specific quantity of readymade garments cleared from their warehouses without payment of duty, resulting in the confirmation of a demand for duty, redemption fine, and penalty. The appeal was rejected due to the appellant's failure to deposit a specified amount as ordered by the Commissioner (Appeals) in a Stay Order.

2. The Tribunal considered the amendments to Rule 4 of the Central Excise Rules, 2002, specifically focusing on the provision relating to goods produced on job work. The interpretation of the rule in light of the amendments and relevant notifications was crucial in determining the liability of the appellant to pay duty on the cleared goods.

3. The Tribunal referred to clarifications issued by the Central Board of Excise & Customs regarding the levy of Central Excise duty on goods produced before a specific date but lying in stock thereafter. The clarifications provided guidance on the treatment of such goods for duty purposes and the requirement for manufacturers to submit stock declarations for excise duty payment and Cenvat credit claims.

4. Considering the facts presented, the Tribunal noted that the appellant had received the readymade garments from job workers under documents showing nil rate of duty. This fact, coupled with compliance with the Board's instructions, raised a prima facie case in favor of the appellant regarding the duty liability on the cleared goods stored in their warehouses.

5. In light of the prima facie case and the appellant's request for a remand to hear the appeal on merits without pre-deposit, the Tribunal decided to remand the matter to the Commissioner (Appeals) for a fresh hearing. The direction was made to allow the appeal to be heard without insisting on any pre-deposit, emphasizing the need to decide the case on its merits.

6. The Tribunal's decision to remand the matter for a fresh hearing without pre-deposit signified a balanced approach to ensure a fair consideration of the appellant's case regarding the liability to pay central excise duty on the cleared readymade garments, taking into account the legal provisions, amendments, and clarifications provided by the relevant authorities.

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