2002 (12) TMI 302 - Commissioner - Central Excise

Issues Involved:

1. Rejection of refund claim of Rs. 1,60,000/- by the Assistant Commissioner of Central Excise.
2. Imposition of a penalty of Rs. 70,000/- under Rule 173Q of Central Excise Rules, 1944.
3. Alleged evasion of excise duty by splitting invoices to remain within the exemption limit.
4. Adjustment of pre-deposit under the Kar Vivad Samadhan Scheme (KVSS) and subsequent refund claim.

Issue-wise Detailed Analysis:

1. Rejection of Refund Claim of Rs. 1,60,000/-:

The appellant, M/s. Paramount Electroplating Works, filed a refund claim of Rs. 1,60,000/-, which was rejected by the Assistant Commissioner of Central Excise. The rejection was based on the premise that no refund was due as the amount had already been adjusted under the Kar Vivad Samadhan Scheme (KVSS). The appellant contended that the pre-deposit should not have been adjusted towards duty and sought a refund with 18% interest. However, the appellate authority upheld the rejection, stating that the settlement under KVSS had already considered the pre-deposit, making the refund claim invalid.

2. Imposition of Penalty:

A penalty of Rs. 70,000/- was imposed on the appellant under Rule 173Q of Central Excise Rules, 1944. This penalty was part of the original order which also included a duty demand of Rs. 5,50,413.73, a fine in lieu of confiscation amounting to Rs. 71,995/-, and personal penalties on individuals associated with the appellant. The penalty was upheld by the CEGAT, though the amounts were reduced. The appellate authority confirmed that the penalty was correctly imposed and maintained the lower authority's decision.

3. Alleged Evasion of Excise Duty:

The appellant was accused of manufacturing and clearing two-wheeler motor vehicle accessories without paying the required duty by splitting invoices between two units to stay within the exemption limit. This act allegedly evaded excise duty amounting to Rs. 6,64,915.70. The initial show cause notice demanded this duty and proposed penalties. The CEGAT, in its final order, confirmed the duty and penalties, though it reduced the amounts. The appellate authority noted that the appellant had not contested this portion of the CEGAT order, thus affirming the duty evasion finding.

4. Adjustment of Pre-deposit under KVSS and Subsequent Refund Claim:

The appellant opted for settlement under the KVSS, which allowed for the adjustment of pre-deposits towards duty arrears. The designated authority under KVSS determined the duty liability after considering the pre-deposit of Rs. 1,50,000/-. The appellant argued that the pre-deposit should not have been adjusted and sought a refund. However, the appellate authority clarified that the KVSS is an independent scheme that treats part payments as payments towards dues. The appellants had authorized the adjustment and paid the balance, making the settlement final and irrevocable. The authority concluded that the refund claim was not valid as the pre-deposit had already been appropriated under the scheme.

Conclusion:

The appeal was dismissed, and the lower authority's order was upheld. The appellate authority found the appellant's claims to be without merit, emphasizing that the settlement under KVSS was final and precluded further litigation. The adjustment of the pre-deposit was deemed appropriate under the scheme's provisions, and the penalties imposed were confirmed as per the adjudicating authority's decision.

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