By TIOL News Service

MUMBAI, JAN 28, 2019: THE facts of the case are that the rate of duty on the goods viz. 'ropes of plastic' manufactured by the appellant were enhanced from 4% to 8% with effect from 7th of July 2009 and, in the show cause notice issued to them, it was the case of central excise authorities that such stocks, as were in possession of the consignment agent on that date should discharge liability at the enhanced rate and, to the extent that goods were removed from the premises of the appellant, duty should be recovered along with appropriate interest, besides penalty.

The appellant contends that the lower authorities had erroneously applied the definition of 'sale' in section 2(h) of Central Excise Act, 1944 to the depots of the consignment agent as the 'place of removal' to the extent of clearance from such premises after the enhanced duty came into force.

It is their contention that 'place of removal' is relevant only for determining value of goods, as provided for in section 4 of CEA, 1944, and not to the determination of rate of duty, which is governed by rule 5 of CER, 2002 in pursuance of section 3 of CEA, 1944. Reliance is placed on the decision in Tamil Nadu Industrial Explosives Ltd. - 2010-TIOL-615-CESTAT-MAD which, incidentally, dealt with a reverse situation.

The Bench considered the submissions as well as the cited case law and observed-

+ It is amply clear that 'place of removal' is relevant only for determination of the value to be utilised for assessment of duty. No allegation is on record of any change or any alteration arising from the value adopted for the purposes of discharge of duty liability at the time of removal from the factory.

+ Considering the decision of the Tribunal, and a plain reading of rule 5 of Central Excise Rules, 2002, the order impugned before us is patently beyond the scope of law.

In fine, the impugned order was set aside and the appeal was allowed.

(See 2019-TIOL-328-CESTAT-MUM)