2005 (11) TMI 142 - AT - Central Excise

Summary

Issues:
Whether loose stock of goods reflected in the RG-1 register should be treated as finished goods for duty liability.

Analysis:
The dispute in this case revolves around the classification of loose stock of goods reflected in the RG-1 register maintained by the processors of fabrics. The main question is whether this loose stock should be considered as finished goods, thereby attracting duty liability at the rate prevailing before the introduction of the compounded levy scheme. The department contends that the goods are indeed finished and duty should be paid accordingly, while the respondents argue that the goods are still under process and were cleared under the compounded levy scheme after being fully manufactured.

Upon hearing both sides, the tribunal observed that the finished nature of the loose stock in the RG-1 register was not contested by the processors until the issuance of a show cause notice. It was noted that the RG-1 register typically includes entries for manufactured goods, and the loose stock refers to finished goods that have not yet been packed. The absence of any reference to the goods being "processed" in the register, which was relied upon by the respondents to support their claim of ongoing processing, further supported the conclusion that the goods were indeed finished prior to the relevant date.

In light of these findings, the tribunal sided with the revenue department, setting aside the previous order and allowing the appeal. The decision was based on the understanding that the loose stock in question should be classified as finished goods, thereby attracting duty liability at the rate applicable before the introduction of the compounded levy scheme.