Rewarehousing certificate is essential proof for duty-free removals, but penalty may still be waived on the facts.

In removals of goods without payment of duty to another warehouse or 100% EOU, the prescribed rewarehousing certificate countersigned by the jurisdictional excise authority is the controlling proof of due receipt and utilisation. Where that authenticated certificate is not produced within the stipulated period, the consignor remains liable for duty, and a consignee-issued certificate alone is insufficient to defeat the demand. On the facts, the duty demand was sustained. Although the default was not cured, the circumstances did not justify penal consequences, so the penalty was set aside.

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Issues: (i) Whether duty was payable on goods removed without payment of duty when the rewarehousing certificate was not produced within the prescribed period; (ii) Whether penalty was justified in the facts of the case.

Issue (i): Whether duty was payable on goods removed without payment of duty when the rewarehousing certificate was not produced within the prescribed period.

Analysis: Removal of goods without payment of duty to another warehouse or 100% EOU is governed by the prescribed procedure, and the rewarehousing certificate countersigned by the jurisdictional excise authority at the consignee's end is the authentic document to establish due receipt and utilization of the goods. Where such certificate is not produced within the stipulated time, the consignor remains liable to pay the duty. The consignee's certificate, in the absence of statutory authentication, was held insufficient to displace the demand.

Conclusion: The duty demand was upheld and is against the assessee.

Issue (ii): Whether penalty was justified in the facts of the case.

Analysis: Although the statutory default regarding the rewarehousing certificate remained uncorrected, the facts did not justify penal consequences. Taking the circumstances into account, the penalty imposed under the penal provision was set aside.

Conclusion: The penalty was deleted and is in favour of the assessee.

Final Conclusion: The demand of duty was sustained, but the penalty was annulled, resulting in a partial relief to the assessee.

Ratio Decidendi: In removals without payment of duty, the statutory rewarehousing certificate is the controlling proof of receipt at destination, and absence of that certificate sustains the duty demand, though penalty may still be waived on the facts.

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