2018 (2) TMI 795 - AT - Central Excise

Clandestine removal - manufacturer of Goa Gutka or bonafide purchaser of the goods - Held that - it is established that the respondent have purchased the goods in the market bonafidely, therefore no duty can be demanded from the respondent who is not a manufacturer of Goa Gutka. Since he is the bonafide buyer of the goods, the goods is also not liable to confiscation. Irrespective of the fact whether the subject goods were cleared on payment of duty or otherwise, the duty demand proposed on the respondent being a non-manufacturer and merely a trader, not liable for payment of Excise duty and consequential punishment - Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Liability of excise duty on alleged clearance of Goa 1000 Gutka
2. Bonafide purchaser defense against duty demand
3. Goods being non-duty paid and duty recovery from bonafide purchaser

Analysis:
The case involved a show-cause notice proposing the demand of Excise duty for the alleged clearance of Goa 1000 Gutka. The Adjudicating Authority dropped the proceedings based on the respondent not being the manufacturer but a bonafide purchaser. The Revenue appealed to the Commissioner (Appeals) who upheld the Order-in-Original, leading to the Revenue's appeal before the Appellate Tribunal.

The Revenue argued that duty is demandable on non-duty paid goods if no duty-paying documents are produced. On the other hand, the respondent contended that being a bonafide buyer under the cover of invoice/challan, they are not liable for duty even if the goods are non-duty paid.

Upon considering the submissions, the Tribunal found that the lower authorities ruled in favor of the respondent as a bonafide purchaser not liable to pay duty. The transaction history revealed that the respondent purchased the goods in the market in a bonafide manner, absolving them from duty payment as a non-manufacturer of Goa Gutka. The Tribunal emphasized that the respondent, as a trader, was not liable for Excise duty or punishment, regardless of the goods being non-duty paid.

The Tribunal upheld the decisions of the lower authorities, dismissing the Revenue's appeals and disposing of the cross objection. The judgment was pronounced in court on 22/12/2017 by Mr. Ramesh Nair, Member (Judicial) at the Appellate Tribunal CESTAT MUMBAI.