2001 (12) TMI 580 - AT - Central Excise

Summary

Issues:
1. Classification of waste and scrap of insulated wires and cables as excisable or non-excisable.
2. Rejection of refund claim by the Assistant Commissioner.
3. Forceful reversal of credit entries in the party's accounts by the Superintendent of Central Excise.
4. Allegations of irregular credit taken by the party and collusion with departmental officers.
5. Imposition of penalty and recovery of interest by the Commissioner of Central Excise.

Issue 1: Classification of Waste and Scrap
The appellants, a manufacturing company, filed a classification list in 1989 claiming waste and scrap of insulated wires and cables as non-excisable. The Assistant Commissioner rejected this claim, leading to duty payment under protest from 1989 to 1994. Subsequent orders by the Assistant Commissioner and Commissioner (Appeals) varied on the excisability of the waste and scrap, resulting in a refund claim of Rs. 60,25,201/-. The party's contention was that the waste and scrap should be considered non-excisable, which was supported by subsequent orders.

Issue 2: Rejection of Refund Claim
The Assistant Commissioner issued a show cause notice questioning the refund claim, prompting a reply from the party. Despite the pending refund claim, the party took credit in their accounts, leading to subsequent actions by the Assistant Commissioner rejecting the claim. The Commissioner (Appeals) later allowed the party's appeal, remanding the case back to the Assistant Commissioner for further consideration.

Issue 3: Forceful Reversal of Credit Entries
Before the formal rejection of the refund claim, the Superintendent of Central Excise allegedly reversed credit entries in the party's accounts forcefully and coercively. This action was contested, leading to appeals and orders by different authorities.

Issue 4: Allegations of Irregular Credit and Collusion
The Commissioner of Central Excise issued a show-cause notice alleging irregular credit taken by the party and collusion with departmental officers. The party vehemently contested these allegations, citing positive advice from the Assistant Commissioner for taking credit and denying any collusion. The Commissioner's order highlighted discrepancies in the party's actions regarding the refund claim and credit entries.

Issue 5: Imposition of Penalty and Recovery of Interest
The Commissioner imposed a penalty on the party under Section 11AC for alleged collusion and unauthorized credit of refund claim amounts. Additionally, interest was sought to be recovered under Section 11AB. The party contested these penalties and interest recovery, leading to an appeal against the Commissioner's order.

In conclusion, the appellate tribunal partly allowed the appeal, setting aside the penalties imposed by the Commissioner. The tribunal acknowledged the irregularities in the party's actions regarding the refund claim and credit entries but noted that the departmental authorities were aware of these actions. The tribunal found no grounds for imposing penalties and interest recovery, emphasizing the need for expeditious resolution of the refund claim pending with the Assistant Commissioner.