1987 (2) TMI 394 - AT - Central Excise

Manufacturer's Duty Liability Upheld despite Ownership Transfer

The Tribunal held that transfer of ownership through book transfers does not absolve a manufacturer from duty liability for Central Excise purposes. Duty ... Rate of duty Issues:1. Transfer of ownership of goods for Central Excise purposes.2. Duty liability on goods removed without assessment and payment.3. Practice of book transfer of goods between related entities.4. Applicability of excise duty on goods transferred.5. Compliance with Central Excise requirements for duty payment and removal.6. Confiscation and redemption fine for non-compliance.Transfer of Ownership of Goods for Central Excise Purposes:The appeal involved a case where the ownership of goods, specifically molasses, was claimed to have been transferred to a sister concern through book transfers without physical removal. The appellants argued that this transfer constituted removal for Central Excise purposes. However, the Tribunal rejected this argument, emphasizing that excise duty liability is based on actual removal or clearance of goods, regardless of ownership transfer. The Tribunal held that transfer of ownership does not absolve the manufacturer from duty liability.Duty Liability on Goods Removed Without Assessment and Payment:The case highlighted instances where the appellants removed molasses without assessing and paying the excise duty leviable on the goods. The Collector of Central Excise directed the appellants to pay duty on the removed molasses and confiscated the remaining stock found in the factory premises. The Tribunal upheld the duty demand, emphasizing that duty liability arises at the time of actual removal of goods, irrespective of ownership transfer or book adjustments.Practice of Book Transfer of Goods Between Related Entities:The appellants claimed a practice of book transfer of molasses to a related distillery, supported by state excise authorities. However, the Tribunal found insufficient evidence to prove that Central Excise officers were aware of or approved this practice. The Tribunal emphasized that compliance with Central Excise requirements is essential, and state excise approvals do not override statutory obligations.Applicability of Excise Duty on Goods Transferred:The Tribunal clarified that molasses were liable to Central Excise duty even before the 1980 budget. Exemptions were conditional on captive consumption, and duty liability remained regardless of ownership transfer. The Tribunal rejected the argument that assessments at nil rates of duty by Central Excise officials precluded duty payment upon actual removal of goods.Compliance with Central Excise Requirements for Duty Payment and Removal:The Tribunal upheld the Board's order that duty liability is determined based on the date of actual removal of goods from the manufacturing site. It emphasized that statutory requirements must be followed, and book transfers alone do not fulfill duty payment obligations. Lack of evidence regarding Central Excise department's approval of the book transfer practice led to the rejection of the appellants' contentions.Confiscation and Redemption Fine for Non-Compliance:Regarding the confiscation of goods and imposition of a redemption fine, the Tribunal found no extenuating circumstances to justify non-compliance with prescribed procedures. The appellants' failure to establish Central Excise department's knowledge or approval of the book transfer practice resulted in the rejection of their appeal. The Tribunal upheld the lower authorities' orders on confiscation and fine, emphasizing the importance of adherence to Central Excise regulations.In conclusion, the Tribunal dismissed both appeals, affirming duty liability on removed goods, rejecting the validity of book transfers as removal for duty purposes, and upholding confiscation and fine for non-compliance with Central Excise requirements.