2000 (7) TMI 342 - AT - Central Excise

Tribunal Upholds Central Excise Duty Demand, Emphasizes Payment Obligation Pre-Removal

The Tribunal ruled in favor of the Revenue, upholding the demand for central excise duty against the manufacturing unit. It was determined that duty ... Recovery of Central Excise duty Issues:1. Appeal against setting aside the demand for central excise duty.2. Dispute regarding duty payment by the manufacturing unit.3. Argument on exemption from duty under a specific notification.4. Consideration of duty payment under Central Excise Rules.5. Imposition of penalty and its reduction.Analysis:1. The appeal was filed by the Revenue against the order setting aside the demand for central excise duty by the Commissioner (Appeals). The issue revolved around whether duty was required to be paid only at one stage, considering that the second unit of the Respondents had already paid the duty subsequently.2. The Respondents, engaged in manufacturing iron castings, cleared goods at nil rate of duty. The Assistant Commissioner confirmed the duty demand, stating that duty must be paid before clearance. However, the Commissioner (Appeals) set aside this order as the goods were cleared after processing and duty payment by another unit of the Respondents. The central issue was the obligation to pay duty by the manufacturing unit as per Central Excise Rules.3. The Respondents argued that they had two units under one entity, and the castings were initially exempt from duty under a specific notification. They cleared the goods to their other unit for further processing under a bona fide belief. The argument was based on the premise that duty is chargeable only once, already discharged by the second unit, and demanding duty again would lead to double taxation.4. The Tribunal analyzed various provisions of the Central Excise Act and Rules, emphasizing that duty liability must be discharged by the manufacturing unit before goods' removal. Despite the second unit paying duty, the duty payment obligation rested with the manufacturing unit. Consequently, the Tribunal set aside the previous order and confirmed the demand for duty on the goods. The penalty imposed was reduced considering the circumstances, acknowledging no malicious intent to evade duty payment.5. The Tribunal concluded by reducing the penalty imposed under Rule 173Q but setting aside other penalties. The appeal was disposed of in favor of confirming the duty demand, while the cross objections by the Respondents were also resolved accordingly.