2009 (4) TMI 202 - HC - Central Excise

Whether Rule 8 of the Central Excise Rules, 2001 or Rule 173G(1)(d) of Central Excise Rules, 1944 is applicable to the facts and circumstances of the case, where it is not the delay in payment of duty on fortnightly basis. Whether the first respondent - Tribunal is right in holding that Rule 173G(1)(d) of C.E. Rules and/Rule 8 of CE Rules, 2001 are applicable to the present case? Held that - In this case, since it has been admitted that the value of the goods sold from the depot was not available, the appellant had adopted the value nearest to the time of removal of goods under assessment and paid the differential duty in respect of the actual price of the goods sold. The Commissioner (Appeals) had held that Rule 173G(1)(d) of Central Excise Rules, 1944 and Rule 8 of Central Excise Rules, 2001/2002 can only be invoked where there was failure in fortnightly/monthly payment of duty and there is no finding that there was such failure. Therefore the above questions of law are answered in favour of the appellant.

Summary

Issues:
1. Applicability of Rule 8 of the Central Excise Rules, 2001 or Rule 173G(1)(d) of Central Excise Rules, 1944 to the case.
2. Correctness of the Tribunal's decision regarding the application of Rule 173G(1)(d) of C.E. Rules and Rule 8 of CE Rules, 2001.

Analysis:
1. The appellant, a manufacturer of HSD bars, cleared products through consignment agents, stock transfer sales, and conversion referred to as "outlets." They adopted market value at clearance for duty payment and paid differential duty upon receiving information on the actual value from the outlets. The issue arose when a show cause notice demanded interest for not following Rule 7 of Central Excise Valuation Rules. The Commissioner (Appeals) acknowledged the appellant's proactive payment of differential duty without departmental instructions and deemed the interest demand incorrect. However, the Tribunal held that the duty was paid after the due date, despite the Commissioner's findings. A similar case precedent highlighted voluntary duty payment upon learning of revised rates, absolving interest liability.

2. The judgment compared the present case with a similar case precedent where duty was paid promptly upon revised rates knowledge, negating interest liability. The Commissioner (Appeals) in the present case applied Rule 7 to determine value when goods were not sold from the depot. As the value from the depot was unavailable, the appellant used the nearest value at the time of goods removal for duty calculation. The Commissioner (Appeals) clarified that Rule 173G(1)(d) and Rule 8 can only apply in cases of failure in fortnightly/monthly duty payments, which was not the situation here. Consequently, the Court ruled in favor of the appellant, setting aside the Tribunal's decision and allowing the appeal without costs.