2015 (11) TMI 41 - AT - Central Excise

Tribunal grants appeal, overturns rejection of application under Rule 16C for 2015-16 financial year. Commissioner directed to grant permission.

Essar Steel India Ltd. Versus Commissioner of Central Excise, Pune-IV

The Tribunal allowed the appeal, setting aside the rejection of the application for permission to remove goods for further processing under Rule 16C for ... Rejection of permission to remove the goods for further processing under Rule 16C of the Central Excise Rules, 2002 - respondent denied the permission on the grounds that the case of the appellant was not found a deserving case as is prescribed under the Board s Circular No.844/2/CX dated 31/01/2007 - violation of the prescribed procedure and conditions of Rule 16C as well as Rule 12AA - Held that:- Appellant has been granted the permission under Rule 16C of the Rules to remove the goods without payment of duty for carrying out certain processes not amounting to manufacture from the financial year 2011-12 till 2014-15. The only ground for refusal to grant permission for the year 2015-16 as mentioned in the impugned order is that the appellant s case was not found to be a deserving case for grant of extension. Further the impugned order does not mention any specific reasons as to how the appellant is not found deserving for grant of permission under Rule 16C of the Rules. Revenue has also failed to prove that the appellant has committed any violation of the terms and conditions and procedure prescribed by the learned Commissioner while granting the permission. In view of these circumstances, we hold that denial of permission under Rule 16C is not legally sustainable. - Impugned order is set aside - Decided in favour of assessee. Issues:- Appeal against rejection of application for permission to remove goods for further processing under Rule 16C of the Central Excise Rules, 2002 for the financial year 2015-16.Detailed Analysis:Issue 1: Rejection of ApplicationThe appeal was filed against the rejection of the application by the Commissioner of Central Excise & Service Tax, Pune-IV, for permission to remove goods for further processing under Rule 16C for the financial year 2015-16. The appellant, engaged in manufacturing activities, had applied for renewal of permission under Rule 16C, which was rejected by the respondent citing reasons of the case not being found deserving as per Circular No.844/2/CX dated 31/01/2007. The respondent also alleged violations of prescribed procedures and conditions of Rule 16C and Rule 12AA of the Rules.Issue 2: Legal ProvisionsThe appellant's counsel argued that Rule 16C allows the manufacturer to remove excisable goods for processes not amounting to manufacture without payment of duty, subject to specified conditions. The appellant had followed the detailed conditions specified by the jurisdictional Commissioner at the time of initial permission grant in 2011, maintaining proper records of dispatch, receipt, and inventory of goods.Issue 3: Compliance and BenefitThe appellant contended that there were no instances of violation of Rule 16C or Rule 12AA, and no show-cause notice was issued for any such violations. It was emphasized that Rule 16C is a beneficial legislation benefiting the assessee and facilitating trade. The appellant had paid more duty by following Rule 16C, resulting in higher duty payment compared to duty under Rule 8.Issue 4: Respondent's ArgumentThe Additional Commissioner representing the respondent argued that permission under Rule 16C is granted in deserving cases and the appellant's case for extension of permission for the year 2015-16 was not found deserving. However, during the grace period allowed by the Commissioner, no violations were found, and no prejudice to revenue was reported.JudgmentAfter considering the submissions and perusing the records, the Tribunal found that the denial of permission for the year 2015-16 was not legally sustainable. The Tribunal held that the appellant had been compliant and granted permission under Rule 16C in previous years. As a result, the appeal was allowed, the impugned order was set aside, and the Commissioner was directed to grant permission to the appellant for the financial year 2015-2016 under Rule 16C, considering the commercial necessity and the benevolent nature of the rule.ConclusionThe Tribunal allowed the appeal, emphasizing the importance of following legal procedures and ensuring that administrative discretion is exercised judiciously for the benefit of the assessee and trade.