1999 (3) TMI 140 - AT - Central Excise

Summary

Issues:
- Interpretation of Rule 173H of the Central Excise Rules regarding the period for removal of duty-paid goods brought into the factory.
- Validity of demand for duty and penalty under Rule 9(2) of the Central Excise Rules read with Section 11A of the Central Excise Act.
- Appeal against the order in appeal dated 11-11-1997 passed by the Commissioner of Central Excise (Appeals).

Interpretation of Rule 173H:
The appeal was filed against an order by the Commissioner of Central Excise (Appeals) regarding the clearance of duty-paid goods under Rule 173H of the Central Excise Rules. The issue revolved around the contention that the appellant cleared the goods after six months from receipt in the factory, which was the basis for the demand and penalty imposed. The appellant argued that Rule 173H does not specify a six-month period for clearance of goods brought into the factory under this rule. The Commissioner (Appeals) upheld the order, stating that the appellants contravened Rule 173H by clearing the goods after six months without permission or extension. However, the Tribunal found that Rule 173H does not mention a specific period for removal of goods, leading to the conclusion that the Commissioner's finding was not sustainable. Consequently, the impugned order was set aside, and the appeal was allowed.

Validity of Demand and Penalty:
The adjudicating authority had demanded duty under Rule 9(2) of the Central Excise Rules read with Section 11A of the Central Excise Act, along with imposing a penalty under Rule 173Q of the Central Excise Rules. The appellant contended that the demand was based on clearing goods under Rule 173H after six months, which they argued was not a stipulated period. The Tribunal analyzed the provisions of Rule 173H, emphasizing that it does not specify a timeframe for removal of goods brought into the factory. Therefore, the Tribunal concluded that the demand and penalty based on the six-month period for clearance were not valid, leading to the setting aside of the impugned order and allowing the appeal.

Appeal Against Commissioner's Order:
The appellants filed an appeal against the order dated 11-11-1997 passed by the Commissioner of Central Excise (Appeals). The Commissioner had upheld the demand for duty and penalty, stating that the appellants contravened Rule 173H by clearing goods after six months without proper authorization. However, the Tribunal, after considering the arguments and provisions of Rule 173H, found that the Commissioner's decision was not sustainable due to the absence of a specified period for removal of goods under the rule. As a result, the Tribunal set aside the impugned order and allowed the appeal, providing relief to the appellants in this case.