2004 (10) TMI 401 - AT - Central Excise

Summary

Issues: Duty demand and penalty imposition based on Rule 173H of Central Excise Rules

Analysis:
The appeal before the Appellate Tribunal CESTAT, New Delhi involved a duty demand of approximately Rs. 3 lakhs and a penalty of Rs. 50,000 imposed on the appellant. The duty demand was related to goods that had been received back by the appellant and cleared after reprocessing, with the appellant claiming the benefit under Rule 173H of the Central Excise Rules. However, the benefit was rejected on the grounds that the goods were not received back under duty paying documents and there was a delay in applying for exemption from producing such documents.

The appellant contended that the goods were returned by the original purchaser under challans, and even though the copies of invoices evidencing duty payment were not returned by the purchasers, the appellant filed a D-3 declaration along with their copy of the invoice under which the goods were initially cleared. The officers did not raise any objection to the absence of the buyer's copy of the duty paying invoice when the D-3 declaration was submitted. Subsequently, when a Show Cause Notice was issued, the appellant applied for exemption from producing those documents and provided copies of invoices referred by the buyer to establish the identity of the goods and the duty paid on them.

Upon reviewing the record and hearing both sides, it was noted that Rule 173H(2) allows an assessee to bring excisable goods into the factory with duty paying documents if certain conditions are met. However, a proviso under the rule allows relaxation of the requirement of producing duty paying documents if the Commissioner is satisfied that the identity of the goods can be established by other evidence. In this case, the appellant promptly filed the D-3 return upon receiving the goods back, and the identity of the goods was established through the appellant's copy of the duty paying invoice and subsequently filed buyer's copies. As there was no dispute about the identity of the goods, the demand for duty based on the delay in filing duty paying documents was deemed unjustified.

Therefore, the Tribunal set aside the duty demand and penalty, allowing the appeal in favor of the appellant. The judgment emphasized that since the receipt of the goods and their identity were established through proper documentation, there was no justification for the duty demand and penalty imposed on the appellant.