2004 (3) TMI 450 - AT - Central Excise

Summary

Issues:
1. Availing credit of duty on improper duty paying documents.
2. Issuance of debit notes for extra consideration.
3. Barred by limitation.
4. Imposition of penalty.

Analysis:
1. The assessees were involved in the manufacture of HDPE/Polypropylene sacks and moulded furniture, availing credit of duty paid on inputs and capital goods under Rule 57A and Rule 57Q of the Central Excise Rules, 1944. They availed credit of duty paid on inputs/capital goods amounting to Rs. 1,44,809/- based on invoices that were not proper duty paying documents. The Commissioner of Central Excise confirmed the demand raised in the notice, imposing penalties on the company and its Chief Executive Officer. The company contested the demand of Rs. 42,50,000/-, Rs. 1,44,809/-, and the penalties in the appeal.

2. The main contention of the appellants was that the debit notes, considered as extra consideration attracting duty payment, were not provided to them as they had been seized/withdrawn by the Directorate General of Anti-Evasion. They argued that the demand of Rs. 1,44,809/- was time-barred as the allegedly improper duty paying documents were included in the returns and relevant extracts. The appellants requested another opportunity to explain the debit notes, highlighting that each debit entry had a corresponding credit entry in their ledger accounts, mainly with cement factories, indicating no clandestine removal of sacks without duty payment.

3. Despite multiple opportunities for hearings provided by the adjudicating authority, the appellants did not utilize them fully. However, considering the appellants' assertion that they could satisfactorily clarify the debit notes issue and the limitation argument, the Tribunal, in the interest of justice, set aside the impugned order. The case was remanded for fresh consideration to the adjudicating authority, with instructions to furnish copies of the debit notes to the appellants for a fair hearing before issuing new orders on both contested issues.

4. Consequently, the appeal was allowed by remand, granting the appellants the chance to present their explanations regarding the debit notes and the alleged use of improper duty paying documents, ensuring a fair opportunity for defense before any final decision on the demands and penalties imposed by the Commissioner of Central Excise.