2005 (4) TMI 462 - AT - Central Excise

Summary

Issues:
1. Validity of duty payment and cancellation of gate passes after goods clearance.
2. Interpretation of Rule 173G(2)(vii) regarding cancellation of gate passes.
3. Imposition of penalty for duty recovery.

Analysis:
1. The case involved the clearance of goods by the appellants with duty payment and Central Excise gate passes. Subsequently, due to a dispute over the sale price, the goods were recalled from the transporter's godown, leading to the cancellation of the consignment note and gate passes. The appellants informed the department 4 days after the original clearance, recredited the duty in their PLA register, and received a Show Cause Notice for duty recovery and penalty imposition.

2. The lower appellate authority contended that Rule 173G(2)(vii) allowed gate pass cancellation only before goods removal from the factory. However, the appellate judge disagreed, stating that the rule permits cancellation after duty payment, allowing the assessee to inform the Central Excise officer promptly and recredit the duty. In this case, the gate passes were canceled on the same day as recrediting, and the goods were returned to the factory, leading to the judge's decision that duty recovery on the same goods cannot be upheld.

3. Consequently, the judge set aside the impugned order, ruling in favor of the appellants, and allowed the appeal against the duty recovery and penalty imposition. The judgment emphasized the correct interpretation of Rule 173G(2)(vii) in allowing gate pass cancellation post-duty payment and the necessity of promptly informing the Central Excise officer for recrediting the duty amount.