2007 (11) TMI 514 - AT - Central Excise

Summary

Issues involved: Appeal against confirmation of demands u/s 11A(1) of Central Excise Act, imposition of penalty u/s 11AC, seizure and release of goods, challenge to confiscation and penalties confirmed by Commissioner (Appeals).

Confirmation of Demands u/s 11A(1) of Central Excise Act:
The appeal arose from the confirmation of demands of Rs. 13,51,828/- u/s 11A(1) of Central Excise Act, 1944 read with Rule 12 and 9 of CE Rules. The appellants, manufacturers of pipe fitting and forging, availed SSI exemption but failed to reverse/pay the amount equivalent to Cenvat credit on inputs in stock. The seized goods were released on redemption fine. The Original Authority confirmed the demands and imposed a penalty u/s 11AC of Central Excise Act. The Commissioner (Appeals) also confirmed the penalties imposed. The appellants contended that they were eligible for time-bar benefit as there was no suppression of facts, and details were recorded in the RT 12 returns.

Imposition of Penalty u/s 11AC:
The counsel argued that as there was no suppression of facts, the penalty u/s 11AC should not apply. He further contended that confiscation was not necessary as there was no violation of Central Excise Rules. The appellants raised legal grounds challenging the penalty under Section 11AC, stating that the contravention pertained to Cenvat Credit Rules, not Rule 25 of the CE Rules. The appellants submitted additional documents, extracts of RT 12, to support their case for remand to the Original Authority for further examination.

Seizure and Release of Goods:
The appellants relied on statutory documents, RT 12 returns, regularly submitted to the department. The grounds raised were deemed legal, leading to the allowance of the miscellaneous application. The question of whether the appellants were justified in availing Cenvat credit for inputs in stock was raised. The duty amount demanded was confirmed due to irregular availment of Cenvat credit. However, the issue of wrong confiscation of goods and non-levy of penalty required further examination by the Original Authority based on the new grounds raised by the appellants.

Challenge to Confiscation and Penalties:
The matter was remanded to the Original Authority to examine the plea that penalty was not leviable u/s 11AC due to no suppression of facts and that the goods were not confiscable as argued. The Original Authority was directed to hear the appellants and pass an appropriate speaking order within four months. The confirmation of penalty and confiscation of goods was set aside, and the matter was remanded for de novo consideration in the interest of justice.