2017 (5) TMI 689 - AT - Central Excise

Clearance made against CT-3 provided by the consignee of the goods - demand on the ground that the appellants have not produced the re-warehousing certificate in time - demand of duty in terms of Rule 20(4) of CER, 2002 - Held that - The duty can be demanded from the consignor under this procedure, only in a case where goods are diverted without delivery of the goods to the consignee against CT-3 certificate, which is not the case here - demand not sustainable. Penalty - Held that - The appellants admittedly did not produce re-warehousing certificate, which is requirement under the Rule. The non-production of re-warehousing is contravention of the provisions - penalty u/r 27 of CER, 2002 upheld. Appeal allowed - decided partly in favor of appellant.

Summary

Issues involved:
- Duty liability for clearance of excisable goods against CT3 certificate on ARE-3 form without producing re-warehousing certificate in time
- Interpretation of Rule 20(4) of Central Excise Rules, 2002
- Applicability of Rule 20(3) in case of non-production of re-warehousing certificate
- Assessment of duty recovery from consignee versus consignor
- Imposition of penalty under Rule 27 of Central Excise Rules, 2002

Analysis:

1. The case revolved around the appellants clearing excisable goods without paying duty against a CT3 certificate on an ARE-3 form. The department alleged that the appellants failed to produce the re-warehousing certificate promptly, making them liable for duty under Rule 20(4) of the Central Excise Rules, 2002. A show-cause notice was issued, proposing a demand for excise duty on clearances made against the CT-3 certificate provided by the consignee. The adjudicating authority and the Commissioner (Appeals) upheld the demands, leading the appellants to appeal the decision.

2. Despite the absence of representation from the appellants, they argued through their grounds of appeal that they couldn't produce the re-warehousing certificate as it was not provided by the consignee. They presented evidence showing that the goods were received by the consignee and payments were made. They contended that since the receipt of goods was undisputed, the demand couldn't be raised from the consignor as per Rule 20(4). They highlighted that Rule 20(3) should apply in this case, indicating that any duty recoverable must be from the consignee, as the bond was executed by them and the CT3 was issued against the bond.

3. The Assistant Commissioner representing the revenue reiterated the findings of the impugned order, emphasizing the appellants' liability to pay duty under Rule 20(4) due to the non-production of the re-warehousing certificate.

4. The tribunal carefully considered both sides' submissions and found that while the re-warehousing certificate was not produced by the appellants, it was undisputed that the goods were received by the consignee based on the evidence provided. Therefore, any duty recoverable should be from the consignee under Rule 20(3), not the consignor. The tribunal ruled that the demands against the appellants were unsustainable. However, the non-production of the re-warehousing certificate was deemed a contravention of the provisions, leading to a penalty of ?5000 under Rule 27. The duty demand and interest were set aside, partially allowing the appeal.

5. In conclusion, the tribunal partially allowed the appeal, emphasizing the importance of complying with procedural requirements while differentiating between duty recovery from consignee and consignor based on the circumstances outlined in the Central Excise Rules, 2002.