2017 (9) TMI 781 - HC - Central Excise

Clandestine removal - Whether Tribunal was right in holding that the Central Excise Duty cannot be demanded from the Respondent as they are not manufacturer or producer of the goods? - Held that - If any duty is demanded on shortages and excess of the goods found at the premises of the respondent, the same is to be demanded from the refineries, who are manufacturers of the goods - In the present case, it was not found that the respondent-assessee had procured the goods clandestinely without payment of duty. In the absence of the respondent-assessee being a manufacturer or producer of the goods, the duty demanded was not held to be valid. Thus, the appeal filed by the respondent-assessee was rightly allowed by the Tribunal. It has been held in a catena of judgments that a registered dealer not being a manufacturer or producer of goods is not liable to pay duty under Section 11D of the Act. Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Whether Central Excise Duty can be demanded from a non-manufacturer or producer of goods?
2. Whether a Bonded Warehouse receiving non-duty paid goods is liable to discharge duty liability and be treated as a dealer?
3. Whether the responsibility for payment of Central Excise Duty applies when goods are cleared from the factory to a warehouse or from warehouse to another warehouse?

Analysis:
1. The appellant-revenue filed an appeal under Section 35G of the Central Excise Act against a Tribunal order. The respondent, engaged in storing non-duty paid petroleum products, cleared them from a bonded warehouse after charging duty. The appellant claimed duty on excess quantity sold due to temperature variations, not deposited with the Department. The Tribunal set aside the demand, stating duty can only be demanded from manufacturers, not dealers. The Tribunal's decision was based on precedents like Bharat Petroleum Corporation Ltd., stating registered dealers not producing goods are not liable to pay duty under the Act.

2. The Tribunal found the respondent not being a manufacturer or producer of goods, duty cannot be demanded from them. The duty on shortages and excess goods should be demanded from manufacturers. The Tribunal cited judgments like Commissioner of Central Excise vs. Bharat Petroleum Corporation Ltd. and Commissioner of Central Excise vs. Hindustan Petroleum Corporation Ltd. to support its decision. The appellant failed to show any legal flaw in the Tribunal's findings or challenge the relevance of the cited judgments, leading to the dismissal of the appeal.

3. The Tribunal emphasized the principle that duty is to be demanded from manufacturers or producers of goods. Since the respondent was a registered dealer and not alleged to have procured goods clandestinely without duty payment, the duty demand was deemed invalid. The Tribunal's decision was consistent with established legal principles and supported by relevant case law, resulting in the dismissal of the appeal due to the absence of any substantial question of law.