Warehousing removal and CENVAT credit liability: goods sent under valid procedure were not treated as exempted, and limitation failed.

Goods lawfully removed from a factory to a warehouse under the warehousing provisions were not treated as exempted goods for Rule 6 purposes, so no liability arose to pay an amount equivalent to CENVAT credit on that removal. The later insertion in Rule 6(3)(a) could not be applied retrospectively to create liability for the earlier period. Where the goods were moved under valid warehousing documents, duly re-warehoused, and supported by proper certificates and receipts, the extended period of limitation was also unavailable because there was no suppression or procedural irregularity. The Revenue challenge therefore failed and the demand was dropped.

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Issues: (i) Whether removal of excisable goods from the factory to a warehouse without payment of duty under the warehousing provisions attracted liability to pay an amount equivalent to CENVAT credit under Rule 6. (ii) Whether the extended period of limitation could be invoked when the goods were removed under valid warehousing documents and were duly re-warehoused.

Issue (i): Whether removal of excisable goods from the factory to a warehouse without payment of duty under the warehousing provisions attracted liability to pay an amount equivalent to CENVAT credit under Rule 6.

Analysis: Rule 20 permits removal of excisable goods from the factory to a warehouse without payment of duty, subject to the prescribed conditions and procedure. The dispute related to a period when Rule 6 operated in its earlier form, and the later insertion in Rule 6(3)(a) could not be applied retrospectively to fasten liability. Goods removed under Rule 20 were distinguished from exempted goods for the purpose of Rule 6. The responsibility for duty on warehoused goods remained with the consignee under Rule 20(3), and the removal was made under the prescribed notification and circular.

Conclusion: No liability to pay an amount equivalent to CENVAT credit arose against the assessee on these facts.

Issue (ii): Whether the extended period of limitation could be invoked when the goods were removed under valid warehousing documents and were duly re-warehoused.

Analysis: The goods were cleared under valid documents following the warehousing procedure, and there was no dispute regarding the correctness of certificates, receipts, or re-warehousing. In the absence of any procedural irregularity or suppression, the ingredients for invoking the extended period were not made out.

Conclusion: The extended period of limitation was not invocable.

Final Conclusion: The Revenue's challenge failed, and the order dropping the demand was sustained.

Ratio Decidendi: Goods lawfully removed from the factory to a warehouse under the warehousing provisions are not to be treated as exempted goods for Rule 6 liability, and duty responsibility in such cases lies with the consignee under Rule 20.

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