2003 (12) TMI 474 - AT - Central Excise

Summary

Issues:
1. Violation of principles of natural justice in passing orders.
2. Withdrawal of facility for fortnightly payment of duty.
3. Interpretation of Rule 8 of the Central Excise Rules, 2002.

Violation of principles of natural justice in passing orders:
The Revenue filed an Appeal against an Order-in-Appeal, claiming that the Deputy Commissioner had forfeited the facility of payment of duty on a fortnightly basis for a period of two months due to defaults by the respondents. The Commissioner (Appeals) set aside the initial order as it was passed without following principles of natural justice. The matter was remanded to the Deputy Commissioner for a fresh decision after providing an opportunity for a personal hearing. The Deputy Commissioner then issued a show cause notice and passed a new order withdrawing the facility for fortnightly payment. However, the Commissioner (Appeals) again set aside this order, stating that it was based on an earlier order that was not valid at the time of the new decision. The Commissioner (Appeals) also ruled that the facility could only be withdrawn from the date of communication of the order and not retrospectively.

Withdrawal of facility for fortnightly payment of duty:
The Senior Departmental Representative argued that the Deputy Commissioner had validly withdrawn the facility for fortnightly payment based on merit and reasoning, not blindly following the previous order. He contended that the decision in a specific case was not applicable as the Deputy Commissioner had considered the facts and provided justification for the withdrawal. The Deputy Commissioner, bound by the remand order, withdrew the facility for the specified period, stating that the earlier order was passed in compliance with the remand terms.

Interpretation of Rule 8 of the Central Excise Rules, 2002:
The Advocate for the respondents argued that as per Rule 8, if an assessee defaults in payment for the third time in a financial year, the facility for fortnightly payment cannot be availed from a retrospective date. He cited a Tribunal case to support the argument that the maximum period for forfeiting the facility is two months, and it is not mandatory to forfeit it for the full period. The Advocate contended that since the respondents had already paid duty through PLA for 49 days, it should be considered a sufficient penalty under Rule 8. The Tribunal, considering both sides' submissions, upheld the Commissioner (Appeals)'s decision that the facility could only be withdrawn from the date of communication of the order. It noted that the respondents had already faced a penalty by paying duty on a consignment basis for 49 days, which was deemed adequate under Rule 8. Consequently, the Appeal by the Revenue was rejected, and the cross-objection by the Respondents was disposed of.