2003 (9) TMI 593 - Commissioner - Central Excise

Demand - Intention to evade duty - Cenvat/Modvat - Transfer of credit - Citizen s Charter - Revenue administration - Jurisdiction

Issues Involved:
1. Whether the transfer of capital goods from Mill "B" to Mill "A" without payment of duty constitutes evasion.
2. Applicability of Rule 57AF for transferring unutilized Cenvat credit.
3. Legality of invoking extended period under Section 11A for suppression of facts.
4. Validity of penalties imposed under Section 11AC and Rule 209A.
5. Compliance with the Citizen's Charter and Board's Circular No. 24/2000.

Issue-wise Analysis:

1. Transfer of Capital Goods and Duty Evasion:
The appellant closed Mill "B" at Tiruttani and transferred capital goods to Mill "A" at Thanjavur without paying duty. The lower authority concluded that this was done with the intention to evade duty. However, the appellant argued that the goods were transferred within the same company and that all relevant authorities were informed. The Show Cause Notice (SCN) itself acknowledged that the goods were removed under Form XXVII of the Sales Tax Act, mandatory for inter-unit transfers. The tribunal found no evidence of clandestine removal or intention to evade duty, as the goods were documented and the authorities were informed.

2. Applicability of Rule 57AF:
The tribunal examined Rule 57AF, which permits the transfer of Cenvat credit when a factory is shifted or merged. The appellant had informed the Central Excise authorities about the transfer and installation of machinery at Thanjavur. The tribunal concluded that the appellant was eligible to transfer both the capital goods and unutilized credit under Rule 57AF. No permission was required under this rule, and the demand for duty was deemed unnecessary.

3. Extended Period under Section 11A:
The lower authority invoked the extended period under Section 11A, alleging suppression of facts. However, the tribunal found that the appellant had informed all relevant authorities about the closure and transfer. The tribunal cited several judgments, including Jyothi Limited v. CCE and Patson Transformers (P) Ltd. v. CCE, which held that the extended period could not be invoked in cases where there was no intention to evade duty. The tribunal ruled that the demand was barred by limitation.

4. Penalties under Section 11AC and Rule 209A:
The lower authority imposed penalties under Section 11AC and Rule 209A. The tribunal, referencing the Supreme Court's ruling in Collector of Central Excise v. HMM Ltd., held that when there is no duty liability, penalties cannot be imposed. The tribunal also noted that the penalties were not sustainable as per the judgments in Alagappa Cements v. CCE and Punjab Recorder Ltd. v. CCE.

5. Compliance with Citizen's Charter and Circular No. 24/2000:
The tribunal criticized the Revenue for not responding to the appellant's application for transferring unutilized credit for nine months, violating the Citizen's Charter and Board's Circular No. 24/2000. The tribunal emphasized the importance of prompt and efficient responses from the Revenue authorities, as mandated by the Citizen's Charter. The tribunal held that the failure to respond affected the legality of the impugned order, making it unsustainable.

Conclusion:
The tribunal set aside the impugned order, allowing the appellant's appeal and rejecting the department's appeal. The tribunal permitted the transfer of unutilized credit amounting to Rs. 57,877/- from Mill "B" to Mill "A", reinforcing that the appellant's actions were in compliance with Rule 57AF and that there was no intention to evade duty.

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