2006 (8) TMI 452 - AT - Central Excise

Summary

Issues:
1. Appeal against Order-in-Appeal confirming demand and penalty.
2. Removal of capital goods without payment of duty.
3. Adherence to principles of natural justice.
4. Applicability of Rule 57AF for transfer of credit.
5. Consideration of Modvat credit eligibility in another unit.

Analysis:
1. The appeal was filed against the Order-in-Appeal confirming the demand and penalty imposed on the appellant for removing capital goods without payment of duty. The appellant ceased manufacturing plastic granules and shifted the goods to another factory. The authorities issued a show cause notice for the demand of credit availed on the capital goods, leading to the confirmation of demand and penalty.

2. The appellant argued that the demand was confirmed without following principles of natural justice as they were denied a personal hearing. They contended that the valuation of goods for duty calculation was incorrect and should consider depreciation. The appellant also claimed eligibility for Modvat credit in their new unit at Malanpur.

3. The Department argued that the appellant did not explicitly inform about the closure of the section and that there were no provisions for shifting capital goods without duty payment. However, the Tribunal found that the removal of goods to the appellant's own unit was not in violation of the rules cited by the Revenue.

4. The Tribunal examined Rule 57AF, which allows for the transfer of unutilized CENVAT credit when a manufacturer shifts the factory to another site. It was observed that this rule might apply in the appellant's case, and the lower authorities had not considered this aspect while passing the orders.

5. Considering the failure to address the application of Rule 57AF, the Tribunal decided to remand the matter back to the original adjudicating authority for a reevaluation. The appellant's contention regarding the eligibility of Modvat credit in their new unit was found to align with the provisions of Rule 57AF, warranting a fresh assessment.

In conclusion, the appeal was allowed by way of remand to reexamine the applicability of Rule 57AF and provide the appellant with an opportunity for a personal hearing, ensuring a just decision based on the relevant legal provisions.