1992 (6) TMI 108 - AT - Central Excise

Demand - Removal of semi-finished goods from one factory to another for conversion into finished goods

Summary

Issues Involved:
1. Legality of the demand of duty amounting to Rs. 1,18,065.79.
2. Legality of the imposition of penalty under Rule 173Q of the Central Excise Rules, 1944.

Detailed Analysis:

1. Legality of the Demand of Duty:
The appellants challenged the demand of duty confirmed by the Additional Collector of Central Excise, Bolpur, amounting to Rs. 1,18,065.79, for the removal of ultramarine blue from their Dhadka factory to their Behala factory without payment of Central Excise duty. The appellants contended that they had applied for permission to remove the goods under Rule 56B on 28-2-1986, prior to the removal dates (5-3-1986 to 13-3-1986). They argued that there is always a gap between the application date and the approval date, and the effective date for availing of permission should be the application date. The appellants also asserted that the duty was paid when the goods were removed from the Behala factory, and thus, duty should not be charged twice.

The Tribunal noted that the Adjudicating Authority relied on the Superintendent's observations of short payment of duty in the RT-12 returns for March-April 1986. However, the appellants had already removed the goods from the Behala factory after paying the duty. The Tribunal concluded that the demand of duty made in the impugned order was not sustainable since the goods were dutiable only when converted to the finished stage at the Behala factory, and the duty was already paid upon removal from there. Thus, the demand of Rs. 1,18,065.79 was set aside.

2. Legality of the Imposition of Penalty:
The appellants argued that they applied for permission to remove goods on 28-2-1986, but due to business exigencies, they began removal before receiving formal permission, which was granted on 27-3-1986. They contended that the effective date for permission should be the application date and that the imposition of penalty without mens rea was unwarranted, citing the Supreme Court decision in Hindustan Steel Ltd. v. State of Orissa.

The Tribunal, however, held that the permission could not have retrospective effect and that the goods were removed without obtaining the necessary permission under Rule 56B. The Tribunal referenced the Supreme Court's ruling in Gujarat Travancore Agency v. Commissioner of Income Tax, which established that for statutory offences, intention or mental state is irrelevant, and the mere act of non-compliance constitutes the offence. Consequently, the penalty of Rs. 5,000/- was confirmed, as the removal of goods without permission was a statutory violation.

Conclusion:
The Tribunal set aside the demand of duty amounting to Rs. 1,18,065.79, finding it unsustainable as the duty was already paid when the goods were removed from the Behala factory. However, the imposition of a penalty of Rs. 5,000/- under Rule 173Q was confirmed, as the removal of goods without prior permission constituted a statutory offence. The appeal was disposed of accordingly.