2005 (9) TMI 477 - AT - Central Excise

Summary

Issues: Alleged non-payment of Central Excise duty on free inputs, penalty imposition, settlement under KVSS Scheme, return of goods, imposition of penalty without opportunity for defense, remand for verification of records, sustainability of impugned order.

In this case, the appellant, a manufacturer of transformers, was aggrieved by an Order passed by the Commissioner of Central Excise alleging non-payment of Central Excise duty on free inputs received from another company. The Department claimed that the appellant did not add the value of these inputs to the final product, leading to a demand for duty payment. Additionally, a Show Cause Notice was issued to the appellant and the other company for the same period. The other company settled under the KVSS Scheme, reducing the penalty by 50%. The matter was adjudicated by the Addl. Commissioner, confirming the penalty on the appellant. The appellant argued that the inputs received were for testing purposes and were returned to the other company, supported by challans. The appellant contended that the penalty was imposed without an opportunity for defense and without discussion on the return of goods in the impugned order.

The counsel for the appellant opposed remanding the matter for verification, citing the small amount involved and the merit of setting aside the impugned order. The Tribunal found that both authorities erred in not discussing the appellant's points, rendering the orders unsustainable in law. Consequently, the impugned order was set aside, and the appeal was allowed.