2015 (6) TMI 112 - AT - Central Excise

Permission denied to store goods outside factory premises without duty payment

The Tribunal upheld the Commissioner's decision to reject the appellant's request for permission to store excisable goods outside factory premises without ... Rejection of request for permission under Rule 4(4) of Central Excise Rules, 2002 to store excisable goods out side the factory premises without payment of duty - Held that:- It would be seen from the Rule 4 that Commissioner is empowered in exceptional circumstances having regard to nature of the goods and shortage of storage space at the premises of the manufacturer where the goods are made, permit a manufacturer to store his goods to any other place out side such premises, without payment of duty subject to such condition as he may specify. - It is also noted that the appellant is noncommittal about the period and would need permission atleast for two years. - When space is available near the BSR there is no reason not to construct the storage place there itself. Exception circumstances undoubtedly would imply temporary and brief period. It is also to be noted that even now appellant can store the goods in the proposed place but after payment of duty on provisional or final assessment basis. What appellant is trying out seek is to allow clearance of the goods without payment of duty outside the factory i.e. to warehouse and clearance from there. Admittedly goods are not notified under warehousing provisions, thus what appellant is trying to seek is benefit of warehouse provision in respect of goods which are not notified. It may be noted that in customs there is provision wherein importer can store any dutiable goods imported in the country in bonded warehouse without payment of duty. No such scheme exist for the goods produced in India. - Reasons explained as exceptional nature to grant permission under Rule 4(4) of the Central Excise Rules, 2002. - Decided against assessee. Issues:Request for permission under Rule 4(4) of Central Excise Rules, 2002 to store excisable goods outside factory premises without duty payment.Analysis:1. Issue of Request for Permission:The appellant sought permission under Rule 4(4) of Central Excise Rules, 2002 to store finished products outside the factory premises due to space constraints and operational expansion. The Commissioner rejected the request, citing that the circumstances did not qualify as exceptional and were not of a temporary nature. The appellant argued for permission based on the need for higher inventory to provide timely service to customers.2. Interpretation of Rule 4(4):Rule 4(4) allows storing goods outside factory premises without duty payment in exceptional circumstances due to nature of goods and shortage of storage space. The Tribunal noted that the appellant's request was for a prolonged period of two years and did not specify a temporary situation. The Commissioner emphasized that the circumstances faced by the appellant were normal business difficulties that could be resolved by paying duty and storing goods in proposed premises.3. Comparison with Precedents:The appellant relied on a Tribunal decision in a similar case, but the Tribunal differentiated the present circumstances as not meeting the criteria for exceptional nature under Rule 4(4). The Commissioner highlighted that the permission sought was not for a specific quantity of goods and was open-ended, which was not in line with the rule's provisions.4. Warehousing Provisions and Legal Analysis:The Tribunal discussed Rule 20 of Central Excise Rules, 2002 regarding warehousing provisions for notified goods, emphasizing that the appellant's request did not align with these provisions. The Tribunal noted the absence of a similar provision for domestically produced goods compared to imports, where goods can be stored in bonded warehouses without duty payment.5. Final Decision:After thorough analysis, the Tribunal upheld the Commissioner's decision to reject the appellant's request for permission under Rule 4(4) of Central Excise Rules, 2002. The Tribunal found the reasons provided by the Commissioner to be valid, emphasizing that the circumstances did not warrant exceptional treatment under the rule.In conclusion, the Tribunal dismissed the appeal, citing that the appellant's circumstances did not meet the criteria for exceptional nature as required by Rule 4(4) of the Central Excise Rules, 2002. The decision emphasized the importance of adhering to legal provisions and the specific conditions outlined in the rule for granting permission to store goods outside factory premises without duty payment.