2018 (10) TMI 833 - HC - Central Excise

Clandestine removal - unlabelled stock - Interpretation of Statute - Rule 10 of the Central Excise Rules 2002 read with the letter of the Board dated 9th November, 1964 - Held that - There was a stock of unlabelled and unstamped plywood manufactured by the appellant. The stock may not have been very large but it is an admitted position that it was not taken into account at the time of calculation of the demand, by the respondent. A mixed question of facts and law arise from the said impugned order of the Tribunal. In our opinion, a thorough adjudication on facts is required to ascertain whether there was any quantity of unlabelled and unstamped plywood? Whether the appellant had entered this stock in the Daily Stock Account R. G. 1 according to Rule 10 of the said Rules? What is the amount of duty that is to be adjusted against this stock of goods and in that event what would be the ultimate demand of the respondent? This Court is of the view that these questions of fact and law can be best answered by the tribunal or the adjudicating authorities below. Matter are remanded back to the Tribunal for de novo adjudication.

Summary

Issues:
1. Delay in preferring the appeal
2. Interpretation of Rule 10 of the Central Excise Rules 2002
3. Clandestine removal of goods
4. Adjudication on facts and law
5. Remand of issues back to the Tribunal

Analysis:
1. The judgment addressed the issue of delay in preferring the appeal, which was condoned by the court due to sufficient cause shown.
2. The appeal under Section 35G of the Central Excise Act, 1944 involved the interpretation of Rule 10 of the Central Excise Rules 2002 in conjunction with a letter from the Board dated 9th November, 1964. The appellant argued that the demand of duty imposed on them was incorrect as they had entered the stock of unlabelled and unstamped plywood in their Daily Stock Account as per the relevant rules and a Supreme Court ruling. The respondent, however, alleged clandestine removal of goods for duty evasion purposes.
3. The court noted that there was a stock of unlabelled and unstamped plywood, which was not accounted for in the calculation of the demand by the respondent. The judgment highlighted the need for a thorough adjudication on facts to determine the quantity of such stock, whether it was entered in the Daily Stock Account as required by Rule 10, and the correct amount of duty to be adjusted against it.
4. Given the mixed question of facts and law, the court deemed it appropriate to remand the issues back to the Tribunal for de novo adjudication within a specified timeframe. The parties consented to this approach, and the Tribunal was granted the discretion to further remand the matter for fact-finding purposes.
5. The judgment concluded by disposing of the appeal and stay application, emphasizing that the Tribunal would not be bound by any observations made in the High Court's decision and clarifying that the allegations in the stay petition were not deemed admitted due to the absence of invited affidavits.