2003 (1) TMI 395 - Commissioner - Central Excise

Issues:
1. Forfeiture of deferred payment of duty for specific periods.
2. Violation of principles of natural justice.
3. Applicability of Rule 8(4) of Central Excise Rules, 2002.
4. Scope of forfeiture period under Rule 8(4).
5. Continuous forfeiture of facility.
6. Compliance with self-assessment procedure.
7. Interpretation of Board instructions on payment defaults.

Issue 1 - Forfeiture of deferred payment of duty:
The appellant, a manufacturer of iron and steel products, filed three appeals against orders forfeiting the facility of deferred duty payment for specific periods due to belated/non-payment of duty instalments. The appellant contested the orders, arguing against the forfeiture, claiming to have discharged the liability due, and questioning the validity of the forfeiture periods.

Issue 2 - Violation of principles of natural justice:
The appellant contended that the orders were contrary to law and violated principles of natural justice as no show cause notice was issued before passing the impugned orders. Citing legal precedents, the appellant argued that the facility of payment on a fortnightly basis should only be forfeited after providing an opportunity for a hearing, which was not done in this case.

Issue 3 - Applicability of Rule 8(4) of Central Excise Rules, 2002:
The appellant challenged the applicability of Rule 8(4) concerning the forfeiture of the facility for non-payment of duty instalments. It was argued that Rule 8(3) deals with non-payment conditions but does not authorize forfeiture, questioning the validity of the orders withdrawing the facility for specific periods.

Issue 4 - Scope of forfeiture period under Rule 8(4):
The appellant argued that the forfeiture period should align with the financial year as per Rule 8(4)(i) and 8(4)(ii), limiting the duration of forfeiture within the financial year. The appellant contended that the withdrawal of the facility beyond the financial year was beyond the scope of Rule 8(4) and should be restricted accordingly.

Issue 5 - Continuous forfeiture of facility:
The appellant emphasized that the forfeiture under Rule 8(4) should be limited to two months and not extend continuously. It was argued that the orders for continuous forfeiture over eight months were not in line with the provisions of Rule 8(4), urging for a modification of the forfeiture period.

Issue 6 - Compliance with self-assessment procedure:
The appellant's compliance with the self-assessment procedure under Rule 6 of Central Excise Rules, 2002 was highlighted. The appellant's submission of self-assessed returns was considered akin to self-confession, leading to the issuance of forfeiture orders based on such returns. The structured punishment under Rule 8 of CER, 2002 was emphasized, leaving no room for discretion.

Issue 7 - Interpretation of Board instructions on payment defaults:
The judgment analyzed the appellant's defaults in payment during the financial year and the subsequent issuance of forfeiture orders. The judgment questioned the alignment of the lower authority's actions with the Board's instructions, emphasizing the need for immediate forfeiture upon default. The judgment highlighted the importance of timely tax realization and the impact of pending litigation on the industry and economic stability.

In conclusion, the appeals were allowed with modifications to the forfeiture periods, emphasizing compliance with Rule 8(4) and the need for timely forfeiture orders based on defaults. The judgment balanced the interests of justice and fair play while upholding the principles of natural justice and legal provisions governing duty payment forfeitures.

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