1978 (2) TMI 106 - CGOVT - Central Excise

Steel Ingots - Goods removed for re-rolling and received back for finished goods - Liability to duty

Summary

Issues:
Interpretation of Rule 9A of the Central Excise Rules, 1944 regarding the applicability of duty rates on the dates of removal of goods. Assessment of whether the clearances of steel ingots were unauthorized or illegal removals. Determination of the correct interpretation of the term "cleared" in the context of excisable goods.

Analysis:
The judgment revolves around the interpretation of Rule 9A of the Central Excise Rules, 1944 concerning the application of duty rates based on the dates of removal of goods. The applicants argued that their steel ingots were properly entered in the register and known to the Central Excise Department, emphasizing that the clearances should be considered without payment of duty under Rule 56B. They contended that the removals were not unauthorized and should be assessed to duty at the rates applicable on the dates of clearance under Rule 9A(1)(ii), not at the rates applicable on the dates of payment under Rule 9A(5). The applicants highlighted the term "date of the actual removal" in Rule 9A(1)(ii) to support their interpretation, asserting that their case logically falls within this rule due to its specific exclusion of the general one.

Regarding the factual position, the Government observed that all removals of steel ingots and their dates were known to the Department, covered by factory challans, and not final removals for home consumption. The Government concluded that this was not a case of illegal or unauthorized removal, as the dates of actual removal were known. The Government's interpretation of Rule 9A aimed to treat clearances from a factory differently from unmanufactured products, applying duty rates as in force on the date of clearance, not invoking Rule 9A(5) when the removal dates were known. The absence of "on payment of duty" in clause (ii) of Rule 9A was deemed significant, indicating that clearances from the factory or warehouse, whether duty-paid or not, should be based on the date of actual removal.

Furthermore, the Government rejected the Board's contention that "clearance" implies legal removal, asserting that throughout the Central Excise Rules, "cleared" or "clearance" is synonymous with "removal." The Government highlighted various rule references and sections supporting this interpretation, emphasizing that the duty rates for goods removed from a factory or warehouse should align with the date of actual removal. In light of the factual and legal analysis, the Government held that duty rates should apply based on the dates of removal under Rule 9A(1)(ii) in this case. The Government also noted the absence of any malicious intent by the applicants, leading to the setting aside of the penalty imposed, which was ordered to be refunded to the applicants.