1993 (6) TMI 143 - AT - Central Excise

Summary

Issues:
- Dispute over the rate of duty on inputs under Rule 56A
- Interpretation of Rule 57F(1) of the Central Excise Rules, 1944
- Applicability of duty rate at the time of removal of goods

Detailed Analysis:

The judgment pertains to a case where the appellants were dissatisfied with the demand of duty amounting to Rs. 9,059.34 and filed an appeal. The appellants, engaged in manufacturing rubber products, purchased Synthetic Rubber (Cisemar) and availed duty credit on inputs under Rule 56A. Subsequently, they sent a quantity of the material to another party on loan and reversed the duty credit at 10% ad valorem. However, the Department contended that the material should have been cleared at a duty rate of 15% ad valorem, resulting in a short levy. A Show Cause Notice was issued, and the demand was confirmed by the Assistant Collector, leading to the present appeal.

In the arguments presented, it was highlighted that Rule 57F(1) of the Central Excise Rules, 1944 permits the removal of inputs on payment of appropriate duty. The appellants contended that once goods are cleared from the factory on payment of duty, they cannot be subjected to an enhanced rate of duty upon removal. Reference was made to a relevant case to support this argument. On the other hand, the Respondent argued that permission from the authority is required before removal of goods and distinguished the cited case.

The core issue in the appeal was whether the inputs, specifically Synthetic Rubber (Cisemar), could be removed on payment of duty under Rule 57F(1) at the same rate at which the credit was taken or at the prevalent duty rate during clearance. The Tribunal referred to a prior case to establish that prior to a specific amendment, the duty rate at the time of removal had to be applied. Notably, in the present case, the inputs were removed under Rule 57F on a certain date, and the Show Cause Notice was issued after a significant period, rendering the demand time-barred.

Consequently, the Tribunal allowed the appeal, emphasizing that the demand was time-barred, and granted consequential relief in accordance with the law, without delving into the merits of the case. The judgment provides clarity on the application of duty rates on inputs and the significance of timelines in such disputes.