2000 (8) TMI 547 - AT - Central Excise

Summary

Issues:
- Interpretation of Rule 173Q(1)(bb) of the Central Excise Rules, 1944 regarding verification of antecedents of parties issuing Gate Passes.
- Whether failure to verify antecedents constitutes failure to comply with the law.
- Judicial interpretation of the obligation on manufacturers under Rule 173Q(1)(bb).

Analysis:
The Commissioner of Central Excise, Chandigarh filed a Reference Application seeking clarification on a legal point under Section 35G(1) of the Central Excise Act, 1944. The question of law raised was whether the failure to make inquiries about traders and verify the antecedents of parties issuing Gate Passes amounts to non-compliance with the requirement to satisfy oneself about the identity and address of the manufacturer or supplier, as per Rule 173Q(1)(bb) and its Explanation. Despite notice, no one appeared for the Respondents during the proceedings.

The issue revolved around the imposition of a penalty by the Collector, Central Excise, Chandigarh on an assessee for allegedly failing to comply with Rule 173Q(1)(bb) by not verifying the identity and address of the manufacturer or supplier issuing duty paying documents. The Department contended that the documents were from non-existent units or firms, but the assessee had debited the duty amount subsequently. The Tribunal, in its decision, considered precedents and the argument that in cases where Gate Passes pass through intermediary units, it may be impracticable for the assessee to verify the original manufacturer's genuineness. The Tribunal relied on previous cases to set aside the penalty, emphasizing the practical challenges faced by assesses in such situations.

The Judge acknowledged the reasoning in previous decisions and recognized the need for judicial interpretation regarding the obligations imposed by Rule 173Q(1)(bb). It was noted that the obligation on the manufacturer should involve taking reasonable steps to verify the genuineness of the manufacturer or supplier, either through personal knowledge, familiar signatures, or certificates issued by relevant authorities. The Judge found merit in the Reference Application and referred the matter to the Hon'ble High Court of Punjab and Haryana for further interpretation under Section 35G(1) of the Central Excise Act, 1944.

In conclusion, the judgment delves into the complexities of verifying antecedents under Rule 173Q(1)(bb) and emphasizes the practical challenges faced by assesses in ensuring compliance. The decision highlights the need for judicial clarity on the extent of obligations imposed on manufacturers and the reasonable steps expected in verifying the genuineness of parties issuing duty-related documents.