CX - By keeping in view commercial necessity of appellant and benevolent nature of Rule 16C of CER, 2002, CCE, Pune-IV to grant permission to appellant under Rule 16C of Rules for FY 2015-2016 - Appeal allowed: CESTAT
By TIOL News Service
MUMBAI, JULY 29, 2015: RULE 16C of CER, 2002 inter alia provides that the jurisdictional Commissioner of the Central Excise may permit the manufacturer to remove the goods from the factory to any other premises without payment of excise duty for carrying out tests or any other processes not amounting to manufacture and that after the processing the goods need to be brought back to the factory for further clearance on payment of excise duty or cleared from the processing unit on payment of excise duty.
The CCE, Pune-IV by an order dated 24/03/2015 rejected the application filed by the appellant for grant of permission to remove the goods for further processing under Rule 16C of the CER, 2002 for the financial year 2015-16. And, therefore, the assessee is before the CESTAT.
The brief facts are that the assessee is engaged in the manufacture of jumbo roll of self adhesive paper falling under Tariff 39 & 48 of the CETA, 1985 at its Pune unit. It got permission of the jurisdictional CCE, Pune , to remove the goods from the factory of manufacturer without payment of excise duty from Pune unit to Bangalore unit from the financial year 2011-12 till 2014-15. The appellant has claimed that they had strictly adhered to the procedures and compliances in relation to clearance of goods to Bangalore unit in terms of the provisions of Rule 16C of the Rules and the said permission was renewed by the department on year to year basis. The latest permission granted to the appellant was valid upto 31/03/2015. It is further alleged that for the year 2015-16, the appellant filed application for extension of existing Rule 16C permission on 15/12/2014 but the same was, as mentioned, rejected on the ground that the appellant's case cannot be considered to be falling under the category of "deserving case" as is prescribed under the Board's Circular No. 844/02/2007-CX dated 31/01/2007. Secondly, the appellant had allegedly violated the prescribed procedure and conditions of Rule 16C as well as Rule 12AA of the Rules.
The appellant submitted that the jurisdictional Commissioner at the time of grant of initial permission vide letter dated 14/09/2011 had specified the detailed conditions for removal and accountal of goods and the appellant had strictly followed the procedure mentioned in the said letter which includes maintenance of proper records of dispatch, receipt and inventory of goods both at the Pune unit as well as Bangalore unit, clearance of goods on payment of applicable excise duty from the Bangalore unit, clearance of waste/scrap from Bangalore unit on payment of excise duty, etc.
Moreover, in the impugned order the Commissioner had failed to point out even a single instance where the appellant had violated the procedure laid down in Rule 16C or Rule 12AA of the Rules. And if that was the truth, the department should have issued a show-cause notice but the same has not been issued.
It is also submitted that being a beneficial piece of legislation, discretion must be exercised by the department to benefit the assessee and facilitate trade and manufacturer of goods.
The AR supported the rejection order.
On being specifically asked by the Bench as to whether the appellant have violated any of the conditions or procedure prescribed in Rule 16C during the past years or any prejudice was caused to the Revenue, the AR replied in negative.
The Bench also observed that the Commissioner had allowed a grace period of three months beyond 31/03/2015 for which the appellant could continue to operate under Rule 16C with an added stipulation that compliance to conditions and prescribed procedure would be checked for the month of April, May and June 2015 by surprise visit by the Range Superintendent to the factory at Pune once in every month.
In this regard, the Bench directed the AR to find out whether any violation was committed by the appellant during these three months period. The AR could not point out any.
The Bench, therefore, held -
"8. …. On perusal of the records, we find that the appellant has been granted the permission under Rule 16C of the Rules to remove the goods without payment of duty for carrying out certain processes not amounting to manufacture from the financial year 2011-12 till 2014-15. The only ground for refusal to grant permission for the year 2015-16 as mentioned in the impugned order is that the appellant's case was not found to be a deserving case for grant of extension. Further the impugned order does not mention any specific reasons as to how the appellant is not found deserving for grant of permission under Rule 16C of the Rules. Revenue has also failed to prove that the appellant has committed any violation of the terms and conditions and procedure prescribed by the learned Commissioner while granting the permission. In view of these circumstances, we hold that denial of permission under Rule 16C is not legally sustainable."
In fine, the appeal was allowed by quashing and setting aside the impugned order dated 24/03/2015.
The Commissioner, Pune was directed to grant permission to the appellant under Rule 16C of the Rules for the FY 2015-2016 by keeping in view the commercial necessity of the appellant and benevolent nature of Rule 16C of the CER, 2002.
(See 2015-TIOL-1556-CESTAT-MUM )
