1987 (5) TMI 240 - AT - Central Excise

Summary

Issues:
1. Correct rate of duty applicable at the time of clearance.
2. Imposition of penalty for non-declaration and non-payment of duty.
3. Recovery of duty at 8% under Item 68.
4. Legality of duty recovery at rates other than the relevant period.
5. Applicability of penalty for clearance contrary to the law.

Analysis:

The judgment by the Appellate Tribunal CEGAT, New Delhi, involved a case where the Collector of Central Excise directed the payment of duty on wooden furniture manufactured by a factory. The main contention raised by the factory was regarding the correct rate of duty applicable at the time of clearance. The factory did not dispute the demand for duty but argued that duty was sought to be recovered at 8% under Item 68, which was incorrect as different rates were in force during the relevant period. The factory emphasized that duty should be based on the date of clearance of the goods and objected to the imposition of penalty in the absence of suppression or misstatement.

On the other hand, the department contended that the factory was unlicensed, did not declare the goods to Central Excise, and failed to pay the duty. The department argued that the recovery of duty at 8% for all clearances was in accordance with Rule 9A(5) as the clearances were deemed illegal due to non-compliance by the factory. However, a crucial point highlighted was the absence of a specific charge against the factory for overpayment of duty at the flat rate of 8%, which was the highest duty during that period.

The Tribunal noted that the recovery of duty at rates other than those applicable during the relevant period was unlawful unless specifically authorized by the adjudicating authority. The absence of a formal order to recover duty at 8% rendered the current recovery illegal. The judgment emphasized that duty should only be recovered at the correct rate applicable during the relevant period of clearance as per the Collector's order. Additionally, the penalty imposed on the factory for clearance contrary to the law was upheld, considering the seriousness of the charge despite being not substantial.

In conclusion, the appeal regarding the penalty was rejected, affirming the imposition of penalty for the factory's non-compliance with duty payment and clearance regulations. The judgment clarified the necessity of recovering duty at the appropriate rate based on the relevant period and highlighted the importance of formal authorization for duty recovery at rates different from those applicable during the clearance period.