1997 (6) TMI 193 - AT - Central Excise

Summary

Issues:
- Interpretation of Rule 56B for removal of finished or semi-finished goods without duty payment.
- Dispute regarding the liability to pay duty on tea transferred between factories.
- Validity of the Collector's decision confirming the demand for duty payment.
- Consideration of duty payment by the processing factory as discharge of liability for the despatching factories.

Analysis:

The judgment by the Appellate Tribunal CEGAT, New Delhi involved a dispute regarding the application of Rule 56B for the removal of finished or semi-finished goods without payment of duty. The appellants, who manufactured dust tea, transferred consignments to another factory under the said rule. The Assistant Collector initially permitted this transfer under Rule 56B, but later withdrew the permission, leading to show cause notices being issued for non-payment of duty. The Collector (Appeals) upheld the demand for duty payment, stating that the permission under Rule 56B was wrongly given and subsequently withdrawn, and the despatching factories did not discharge their duty liability. However, no penalty was imposed. The Tribunal noted that the goods were cleared from the processing factory on duty payment but disagreed with the Collector's view that this did not discharge the duty liability on the tea cleared from the despatching factories.

The Tribunal analyzed Rule 56B, which allows the removal of goods without duty payment under specific conditions. It noted that the goods were finally cleared on duty payment from the processing factory, even though the permission under Rule 56B was later revoked. The Tribunal disagreed with the Collector's belief that duty had to be paid again due to the wrong availment of the rule, stating that the subsequent revocation of permission cannot prejudice the assessee. The Tribunal emphasized that the orders confirming the duty demand did not stand, as the appellants were within their rights to clear the goods without payment of duty during the valid permission period. However, it acknowledged the lack of evidence regarding the dates and quantum of duty paid by the processing factory.

In conclusion, the Tribunal set aside the Collector's order and allowed the appeals, granting the Assistant Collector the liberty to verify the facts and quantum of duty paid by the processing factory. The judgment clarified the interpretation of Rule 56B and emphasized the rights of the appellants to clear goods without duty payment under valid permissions, despite subsequent revocations.