2006 (10) TMI 353 - AT - Central Excise

Summary

Issues:
1. Duty liability on damaged glass bottles received back after re-making.
2. Allegation of suppression of facts and duty evasion.
3. Application of case law precedent on duty liability for reprocessed goods.
4. Consideration of insurance claim in determining duty liability.
5. Vagueness in duty element claimed from insurance and its impact on fresh clearances.
6. Limitation period for Show-Cause-Notices and duty calculation based on invoice value.
7. Availment of Cenvat credit, payment of duty, and formal declarations made.
8. Remand to Original Adjudicating Authority for certification of duty element and further examination.

Detailed Analysis:

1. The appeal focused on the duty liability concerning damaged glass bottles received back after re-making. The issue revolved around whether duty can be demanded on goods that were initially cleared on payment of duty, returned due to damage, and re-cleared after re-manufacture.

2. The Department alleged that the appellants suppressed facts and evaded duty by clearing damaged goods after re-manufacture without paying duty. Show-Cause-Notices were issued, demanding duty and proposing penalties, which were confirmed by the Original Adjudicating Authority.

3. The appellants cited a case law precedent where it was held that no duty is payable on defective goods returned for reprocessing. The Supreme Court also upheld this decision. However, the current case involved a demand for duty due to the claim made from the insurance company for the damaged goods.

4. The judgment highlighted that the previous case law did not consider the insurance claim aspect. The Department's argument was that duty should be paid when goods are cleared after re-processing if the claim was already made from the insurance company.

5. There was a contention regarding the duty element claimed from the insurance company and its impact on subsequent clearances after re-processing. The duty calculation based on the invoice value was also questioned.

6. The appellants argued that there was a vague finding regarding the duty element claimed from insurance. They also raised concerns about the limitation period for the Show-Cause-Notices and the duty calculation based on invoice value.

7. It was noted that in the case of the second Show-Cause-Notice, the assessee had availed Cenvat credit, paid duty, and made formal declarations. The officers had reportedly verified these actions.

8. The judgment concluded by remanding the matter to the Original Adjudicating Authority for certifying the duty element claimed by the assessee and examining other aspects, including the limitation period for the Show-Cause-Notice and the imposition of penalties. The appeal was allowed for remand in the specified terms, keeping all issues open for further consideration.