2019 (2) TMI 665 - AT - Central Excise

Determination of rate of duty - Interpretation of statute - relevance of the expression place of removal in determination of duty liability on ropes of plastic - Held that - The place of removal is relevant only for determination of the value to be utilised for assessment of duty. No allegation is on record of any change or any alteration arising from the value adopted for the purposes of discharge of duty liability at the time of removal from the factory. On a plain reading of rule 5 of Central Excise Rules, 2002, it can be concluded that the order impugned before us is patently beyond the scope of law - appeal allowed - decided in favor of appellant.

Summary

Issues:
Relevance of the expression 'place of removal' in determining duty liability on 'ropes of plastic' cleared out of consignment agents' premises after an increase in duty rate.

Analysis:
In the appeal against the order-in-appeal of the Commissioner of Central Excise, Pune-III, the dispute centered around the interpretation of the term 'place of removal' in the context of determining duty liability on 'ropes of plastic' cleared from consignment agents' premises after a duty rate increase. The central excise authorities argued that goods in possession of consignment agents post the duty rate hike should be liable for the enhanced rate, with duty to be paid upon removal from the appellant's premises. They sought duty recovery of &8377; 52,472, along with interest and a penalty under rule 25 of Central Excise Rules, 2002. The appellant's counsel contended that 'place of removal' is only relevant for valuing goods under section 4 of the Central Excise Act, 1944, not for determining duty rates governed by rule 5 of Central Excise Rules, 2002. Reference was made to a Tribunal decision disapproving the link between 'place of removal' and duty rate determination.

The Tribunal, after hearing both sides, examined the relevant provisions of the Central Excise Act, 1944. It clarified that 'place of removal' is solely pertinent for assessing the value of goods, not for altering duty liability at the time of removal from the factory. Citing the Tribunal's decision in a similar case, it emphasized that while the depot may be considered a 'place of removal' for valuation under Section 4, it does not impact determining the duty rate. The Tribunal highlighted that the date of removal from the factory is crucial for duty rate calculation as per Rule 9A, and the 'place of removal' does not influence this aspect. Consequently, the Tribunal found the impugned order to be legally unsound, as it exceeded the legal scope. Therefore, the Tribunal set aside the order and allowed the appeal in favor of the appellant.

This judgment underscores the distinction between the role of 'place of removal' in valuing goods versus determining duty rates under the Central Excise Act, 1944 and the Central Excise Rules, 2002. It reaffirms that the 'place of removal' primarily affects the value for duty assessment, not the duty rate itself. The decision provides clarity on the legal interpretation of these aspects, ensuring consistency in duty liability calculations.