2004 (2) TMI 515 - AT - Central Excise

Summary

Issues:
Challenge to order-in-appeal confirming demand and penalty - Interpretation of Section 110 of Finance Act, 2000 - Classification of "Carcass" - Reopening of settled issue by departmental authorities - Effect of CEGAT judgments on Section 112 of Finance Act, 2000 - Misreading of Section 110(2) of Finance Act, 2000 - Validity of demand and recovery under Section 11A - Overriding provisions in Section 110 of Finance Act, 2000.

Analysis:

The appeal challenged the order-in-appeal confirming a demand of Rs. 62,61,218.76 and a penalty of Rs. 1,00,000 imposed by the Assistant Commissioner, referring to order-in-original No. 65/87. The Assistant Commissioner's order was based on Section 110 of the Finance Act, 2000, enabling recovery of duty short-levied/non-levied for a past period, overcoming Supreme Court rulings on prospective application of changes in classification (Issue 1).

The classification of "Carcass" under Heading No. 54.08 was disputed by the departmental authorities, who classified it under Heading No. 59.09. Despite CEGAT upholding the classification under Heading No. 59.09, the demand was limited to a 6-month period by the Supreme Court, which set aside the CEGAT order. The departmental authorities reopened the demand under Section 110 of the Finance Act, 2000, challenging the settled issue (Issue 2).

The appellants relied on CEGAT judgments to argue that Section 112 of the Finance Act, 2000, does not reopen matters settled by higher authorities. The Tribunal noted a misinterpretation of Section 110(2) of the Finance Act, 2000, emphasizing that recovery can only be sought for valid demands (Issue 3).

The Tribunal held that the recovery sought by the Revenue was not valid as the demand, subject to recovery, had been set aside by the Supreme Court. Section 110 of the Finance Act, 2000, does not override the requirements of Section 11A for recoveries, emphasizing the need to follow the mandates of Section 11A (Issue 4).

Ultimately, the Tribunal concluded that the impugned orders by the lower authorities could not be sustained, allowing the appeal and setting aside the orders passed by the lower authorities (Issue 5).