2007 (8) TMI 173 - AT - Central Excise

Duty liability in case of supply to 100% EOU Supplier s responsibility to produce re-warehousing certificate Appellant s liability for duty continuous untill valid proof of receipts are produced by recipient unit Demand sustainable on supplying unit

Summary

Issues:
1. Duty demand on excisable goods removed without payment.
2. Obligations of supplying unit and receiving unit in the context of CT-3 certificate.
3. Requirement of re-warehousing certificate under Central Excise Rules.
4. Applicability of Chapter VII-A and Chapter X procedures.
5. Responsibility of consignor and consignee in excisable goods clearance.
6. Exemption under Notification No. 1/95 for goods supplied to 100% EOU.
7. Liability of supplying unit until valid proof of receipt by receiving unit.
8. Imposition of penalty in case of non-compliance.

Analysis:
1. The appeal involved a dispute regarding the duty demand on excisable goods, namely C.I. Roller, I.I. Roller, R.I. Roller, and Idler Bkts., removed without payment of duty to a 100% EOU. The appellant failed to submit the re-warehousing certificate as required under Rule 173N read with Rule 156B of the Central Excise Rules, 1944. The original authority confirmed the duty demand and imposed a penalty, which was upheld by the Commissioner (Appeals).

2. The key argument presented by the appellant was that the duty liability for goods supplied to a 100% EOU on the basis of a CT-3 certificate rests with the receiving unit, and there is no obligation on the supplying unit to produce the re-warehousing certificate. However, the Commissioner (Appeals) emphasized the importance of following the complete procedure and complying with all requirements laid down in Chapter VII of the Central Excise Rules, including obtaining the re-warehousing certificate.

3. The Tribunal analyzed the conflict between the procedures of Chapter VII-A and Chapter X. It highlighted that the consignor is responsible for obtaining the re-warehousing certificate, and failure to do so may result in the consignor paying the duty leviable on the consignment. The judgment emphasized the significance of the re-warehousing certificate, especially when dealing with a 100% EOU as the receiving unit.

4. Regarding the exemption under Notification No. 1/95, the Tribunal clarified that both the supplying unit and the receiving unit have specific conditions to fulfill. The supplying unit must follow Rules 156A and 156B of the Central Excise Rules, while the receiving unit must adhere to Chapter X procedures. The responsibility of the supplying unit continues until valid proof of receipt by the receiving unit is provided.

5. Ultimately, the Tribunal partially allowed the appeal, upholding the duty demand on the excisable goods due to the failure to produce the re-warehousing certificate. However, considering no mala fide intent on the part of the appellant, the imposition of the penalty was set aside. The judgment highlighted the ongoing liability of the supplying unit until valid proof of receipt by the receiving unit is established.