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Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: (i) Whether inputs removed from the factory under Rule 57F(1) of the Central Excise Rules, 1944 were liable to duty at the rate prevailing on the date of their original credit or at the rate prevailing on the date of removal; (ii) Whether the duty demand was barred by limitation.
Issue (i): Whether inputs removed from the factory under Rule 57F(1) of the Central Excise Rules, 1944 were liable to duty at the rate prevailing on the date of their original credit or at the rate prevailing on the date of removal.
Analysis: The inputs had been received and credit taken earlier, but were cleared from the factory subsequently under Rule 57F(1). The applicable legal position was that, prior to the amendment effective from 1-3-1992, the duty payable on removal of such inputs was governed by the rate prevalent on the date of clearance from the factory. The earlier credit rate could not be insisted upon for the clearance in question.
Conclusion: The duty was payable at the rate prevailing on the date of removal, not at the rate at which credit had originally been taken.
Issue (ii): Whether the duty demand was barred by limitation.
Analysis: The inputs were removed on 30-4-1986, while the show cause notice was issued only on 6-7-1987. In the absence of any allegation of suppression or similar circumstance, the demand was beyond the permissible period.
Conclusion: The demand was time-barred.
Final Conclusion: The appeal succeeded on the law applicable to removal of inputs and also on limitation, and the assessee obtained consequential relief.
Ratio Decidendi: For removals of duty-paid inputs under Rule 57F(1) prior to its amendment effective from 1-3-1992, the applicable duty is the rate prevailing on the date of removal from the factory, and a delayed demand without suppression is liable to fail as time-barred.
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