2005 (5) TMI 386 - AT - Central Excise

Summary

Issues:
1. Adjustment of Additional Excise Duty towards Basic Excise Duty without prior permission.
2. Short payment of Basic Excise Duty.
3. Validity of the transfer application from AED account to BED account.
4. Consideration of the application for transfer by the lower appellate authority.

Analysis:
1. The appellants, Unit-I and Unit-II of a partnership firm, paid Basic Excise Duty (BED) on knitted/crochetted fabrics by adjusting the excess Additional Excise Duty (AED) paid on like goods for a previous period without prior permission from the department. Show cause notices were issued for short payment of BED due to this adjustment.

2. The Department argued that the adjustment of AED towards BED without permission was unlawful, resulting in short payment of BED. Reference was made to a circular requiring permission for transferring credit balance between minor heads under Central Excise Duties.

3. The original authority noted that the appellants had submitted an application to transfer AED to BED account, but it was unclear if this was before or after receiving show cause notices. The lower appellate authority failed to consider this application, which, if admissible under the circular, would require ratification of the adjustment.

4. The Judge set aside the decision and remanded the case for a fresh consideration by the Commissioner (Appeals) regarding the transfer application. The Judge emphasized the need to carefully examine the application in line with the circular's terms, ensuring the party's right to be heard.

Outcome:
Both appeals were allowed by way of remand, providing an opportunity for the party to present their case regarding the transfer of amount from AED account to BED account.