2003 (9) TMI 446 - AT - Central Excise

Summary

Issues:
1. Confirmation of demand under Section 11A(2) of the Act.
2. Reduction of penalties under Section 11AC and Rule 173Q of Central Excise Rules, 1944.
3. Liability for payment of interest under Section 11AB of the Act.
4. Abatement under Section 4(4)(d)(ii) and cum-duty price exclusion.
5. Entitlement to Modvat credit and related legal principles.
6. Permissibility of raising legal pleas before the appellate authority.

Confirmation of Demand:
The appeal challenged the Order-in-Appeal confirming a demand of Rs. 1,48,731 under Section 11A(2) of the Act. The penalty under Section 11AC was reduced from Rs. 1,48,731 to Rs. 50,000, and under Rule 173Q from Rs. 15,000 to Rs. 5,000. Additionally, the appellants were held liable for interest under Section 11AB.

Reduction of Penalties:
The penalties imposed were reduced by the appellate authority from the original amounts. The reduction was made based on the arguments presented by the appellants' counsel and the relevant legal provisions.

Abatement and Cum-Duty Price Exclusion:
The appellants argued for abatement under Section 4(4)(d)(ii) and exclusion of duty from the cum-duty price. The Tribunal upheld the plea, citing the precedent set by the Larger Bench, which established that duty payable must be excluded from the cum-duty price.

Entitlement to Modvat Credit:
The appellants claimed entitlement to Modvat credit based on the payment of duty on inputs used in the final product manufacturing process. Citing relevant judgments, the Tribunal allowed the plea, subject to verification of duty paying documents and condoning formalities of filing declarations.

Permissibility of Raising Legal Pleas:
The appellants raised legal pleas before the appellate authority, arguing that such claims can be raised for the first time at the appellate stage. The Tribunal accepted this argument, allowing the appellants to raise legal issues before the appellate authority and granting relief based on relevant legal precedents.

Conclusion:
The Tribunal partly allowed the appeal by remanding the case to the original authority for implementing the decisions regarding abatement, cum-duty price exclusion, and Modvat credit entitlement. The appellants were granted the opportunity to present additional evidence during the de novo proceedings, ensuring a fair hearing in accordance with the law.