2007 (11) TMI 66 - HC - Central Excise

Assessee brought back finished goods from buyers for reconditioning & returned back after reconditioning u/r 173H No violation of provision of Rule 173(1)(a) to (c) with intention to avoid payment of duty In view of SC order in another case, impugned order of no clandestine removal is upheld

Summary

Issues:
Challenge to order deleting penalty liability under Section 35(G) of the Central Excise Act, 1944.

Analysis:
The appeal filed by the revenue under Section 35(G) of the Central Excise Act, 1944 challenged the order passed by the Customs, Excise and Service Tax Appellate Tribunal, New Delhi, which deleted the liability of the assessee-respondent to pay penalty. The Tribunal found that the assessee-respondent, working under Rule 173H of the Central Excise Rules, had brought back finished goods from buyers, reconditioned them, and cleared them without payment of duty as per Rule 173H. The Tribunal concluded that there was no intention to remove goods without payment of duty and that Rule 173H was enacted to prevent double payment of duty. It was noted that Rule 173Q provisions were not attracted to the case, and no specific show cause notice was issued for violation. The Tribunal held the show cause notice as vague, emphasizing that Rule 173Q applies in cases of intentional duty avoidance, as established by the Supreme Court's judgment in Amrit Foods vs. Commissioner of Central Excise, U.P. 2005 (190) E.L.T. 433 (S.C.).

The High Court, after considering the arguments, found no merit in the revenue's appeal. The Tribunal's decision was deemed to be based on sound reasoning and was upheld. The Court dismissed the appeal, affirming the Tribunal's order.