2005 (4) TMI 355 - AT - Central Excise

Summary

Issues: Claim of abatement of duty, adjustment of duty liability, imposition of penalty.

Claim of Abatement of Duty: The appellant, engaged in manufacturing M.S. Ingots, availed the facility under Rule 96ZO(3) of the Central Excise Rules, 1944. They claimed abatement of duty amounting to Rs. 1.25 Lakhs for the period when the factory was closed. The authorities issued a show cause notice alleging short payment of duty during a specific period. The appellant argued that their abatement claim had been sanctioned and should be adjusted against the duty demand. The authorities rejected this claim, stating there was no provision for such adjustment. The Tribunal found that the appellant was entitled to the abatement benefit and was liable to pay the duty of the same amount, making the exercise revenue neutral. The demand of duty was set aside, and no penalty was imposed.

Adjustment of Duty Liability: The appellant adjusted the abatement amount on their own while discharging their duty liability for a subsequent period. The authorities contended that the appellant should have waited for the abatement sanction and claimed a refund instead of adjusting it themselves. The Tribunal acknowledged that the appellant's adjustment was premature and could attract penal action. However, they concluded that there was no justification for demanding duty against the appellant, as the exercise was revenue neutral. The Tribunal allowed the appeal and provided consequential relief to the appellant.

Imposition of Penalty: The appellant's actions, although premature and potentially attracting penal action, were deemed revenue neutral by the Tribunal. The Tribunal set aside the demand for duty and did not impose any penalty on the appellant. The decision was based on the understanding that while the appellant may have erred in adjusting the abatement amount without waiting for official sanction, the overall financial impact was neutral. The Tribunal's ruling focused on the revenue neutrality of the appellant's actions and the lack of justification for imposing a penalty or demanding duty in this particular case.