2015 (2) TMI 882 - HC - Central Excise

Advalorem duty or Compounded duty - goods manufactured before the cut of date - entry in RG-1 register as proof - revenue contended that, there was no occasion for the Assessee to have entered this stock as loose - Goods Covered under Hot Air Stenter Independent Processors Annual Capacity Determination Rules, 1998 - Held that - It is clear from the argument of the Assessee that once the stock, as declared in the register, has been verified and accepted, then, the Revenue could not have subsequently argued to the contrary. In such circumstances, when their findings of fact were termed perverse, the Tribunal, as the last fact finding authority, performed its duty in law and interfered with the orders, though concurrently rendered. Once they were interfered because they were found to be perverse and vitiated by error of law apparent on the face of the record, then, the impugned order of the Tribunal in that behalf does not raise any substantial question of law. - Decided against the revenue.

Summary

Issues:
Challenge to CESTAT order allowing Assessee's appeal against Commissioner of Central Excise order regarding Central Excise duty on textile goods declared as "loose" in RG1 register.

Analysis:
The main issue in this case revolves around the liability of the Assessee to pay Central Excise duty on textile goods declared as "loose" in the RG1 register. The Appellant argues that the Assessee should pay duty on the fabric declared as "loose" in the register, as it should have attracted advalorem duty under the changed effect of section 3A of the Central Excise Act, 1944. The Appellant also highlights the introduction of the Compounded Levy Scheme and the rules applicable to the Assessee from a specific date. The Appellant emphasizes that the stock position of finished goods declared as "loose" should have attracted duty at the old rate due to the change in duty structure. The Appellant contests the Tribunal's findings, arguing that the stock was verified and confirmed by the authorities, and any contrary finding by the Tribunal is erroneous and based on a misinterpretation of facts.

On the other hand, the Assessee argues that the Tribunal's findings are based on pure questions of fact and cannot be reevaluated in the limited jurisdiction. The Assessee asserts that the outstanding stock of finished goods was declared to the satisfaction of the jurisdictional authority and only the declared quantity should be subjected to duty. The Assessee contests the duty claim on the additional stock of fabric in loose condition, stating that it was subsequently carried forward for further manufacture along with fresh issues. The Assessee maintains that the Appeal does not raise any substantial question of law and should be dismissed.

Upon perusing the memo of Appeal and relevant annexures, the Court examines the entries in the RG1 register and the verification process conducted by the jurisdictional superintendent. The Court notes that the Revenue's argument regarding the classification of the huge stock of cloth as "loose" is not justified if it was not accounted for as finished goods or manufactured goods. The Court observes that the Assessee's declarations were accepted after verification, and the Revenue's insistence on terming the stock as "loose" was not proven. The Tribunal found that the Revenue failed to establish beyond the stock register how the Assessee's case of loose stock for further processing could be discarded. The Tribunal concluded that the duty determined by the Revenue was not sustainable based on crucial factors and undisputed records, which were overlooked by the lower authorities. As the Tribunal found the earlier orders to be perverse and vitiated by error of law, the Appeal was dismissed in favor of the Assessee.

In conclusion, the Court dismissed the Appeal, ruling in favor of the Assessee and against the Revenue, as the Tribunal's interference with the orders was justified based on the factual findings and legal errors present in the case.