1988 (2) TMI 387 - AT - Central Excise

Summary

Issues:
1. Demand of duty under Rule 9(2) of the Central Excise Rules, 1944.
2. Imposition of penalty under Rule 173Q of the Central Excise Rules, 1944.
3. Exemption from payment of duty for manufactured goods under Notification No. 105/80.
4. Interpretation of "for home consumption" under the Central Excise Rules.

Analysis:
1. The appellants challenged the demand of duty amounting to Rs. 33,370.91 under Rule 9(2) of the Central Excise Rules, 1944, and the imposition of a penalty of Rs. 500 under Rule 173Q. The dispute arose when the officer found that the appellants had manufactured corrugated boxes without a Central Excise License and exported goods to Nepal and Bhutan without paying duty or following legal procedures. The appellants argued that their goods were exempt from duty under Notification No. 105/80 and were not required to maintain certain accounts or follow specific procedures. However, the adjudicating authority disagreed and demanded duty and imposed a penalty, leading to the appeal.

2. The appellants contended that the manufactured corrugated boxes were exempt from duty under Notification No. 105/80 and that the goods cleared for home consumption did not exceed the exemption limit of Rs. 30 lakhs. They argued that the goods were not directly exported to Nepal and Bhutan but were first cleared to their godowns and then sold to buyers in those countries. The appellants cited relevant case law and tribunal decisions to support their interpretation of the taxing statute and notification. However, the tribunal found no merit in the appellant's contentions. The tribunal emphasized that the exemption under Notification No. 105/80 applied only to goods cleared for home consumption. The tribunal noted that the goods were exported directly to buyers in Nepal and Bhutan, indicating that they were not cleared for home consumption, regardless of the route taken from the factory. As a result, the tribunal upheld the demand for duty and penalty, as the appellants exported goods without paying Central Excise duty or obtaining a license, contrary to the rules.

3. The tribunal referred to the Federal Court of India's decision in a previous case to highlight that excise duty is levied on articles produced for home consumption. The tribunal observed that the goods were exported directly to Nepal and Bhutan based on orders placed with the appellants at their official address, indicating that the goods were not cleared for home consumption. Whether the goods were cleared from the factory or their godown, the tribunal concluded that the appellants exported the goods outside the country, not for home consumption, rendering them ineligible for the exemption under Notification No. 105/80. The tribunal upheld the contravention of rules as detailed by the Assistant Collector and dismissed the appeal for lacking merit.

In conclusion, the tribunal upheld the demand for duty and penalty, emphasizing that the goods were not cleared for home consumption as required under the Central Excise Rules, and were exported to Nepal and Bhutan without payment of Central Excise duty or adherence to licensing requirements.