Differential excise duty on diverted export goods applies at the rate prevailing on the date of payment despite delay in demand

Goods cleared for export under bond but diverted to home consumption attract differential central excise duty at the effective rate prevailing on the date of payment under the governing diversion rule. The note states that the bond executant remains liable for the duty, and delay in issuing the demand does not alter the statutory incidence or defeat recovery. On that basis, the enhanced rate was applied and the demand for differential duty was sustained, with the revision application failing and the order-in-appeal left undisturbed.

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Issues: Whether, on diversion of goods earlier cleared for export under bond to home consumption, the demand for differential central excise duty was correctly raised at the enhanced rate prevailing on the date of payment.

Analysis: Goods initially cleared for export under bond were diverted to home consumption, and the applicable demand was issued under the rule governing such diversion. The rate of duty for this purpose was determined by the rule fixing the effective rate as the rate in force on the date of payment. The delay in issuing the demand did not shift the statutory incidence of duty, because responsibility for payment remained with the bond executant and the legal position under the rules was clear.

Conclusion: The demand for differential duty at the enhanced rate was upheld.

Final Conclusion: The revision application failed and the order-in-appeal was left undisturbed.

Ratio Decidendi: Where goods cleared for export under bond are diverted to home consumption, excise duty is chargeable at the effective rate prevailing on the date of payment, and delay in issuance of the demand does not defeat liability under the governing rules.

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