2012 (11) TMI 1072 - HC - Central Excise

Duty demand - Whether assessee who is engaged in the business of manufacture and sale of steel is liable to pay Excise duty on the item called conveyor belts when such belts are removed by the assessee as a scrap item and if it is held that such item is subjected to payment of duty then under what sub heading and by which name/classification and at what rate - Held that - Tribunal did not decide the issue in detail with reference to the facts of the case, the relevant rules and decided case law on the subject which have a bearing over the controversy and hence we can safely conclude by saying that impugned order is essentially a cryptic and unreasoned one and not liable to be sustained in this appeal. It does require a fresh look and in depth debate and discussion both on facts and in law in the light of relevant rules, the decided case law on the subject cited at the bar by both the sides and then to return a finding by the Tribunal as to whether assessee is liable to pay any Excise duty on the items/goods in questions for which show cause notice was served on them or not and if held liable to pay then at what rate it is payable and under which heading/sub-heading it is payable and if not liable to pay any duty then why and on what basis it is not liable - Since the issue is of frequent occurrence involving sizable amount of duty if found payable and hence we consider it apposite to remand the case to the Tribunal for deciding the appeal afresh on merits strictly in accordance with law. - Decided in favour of Revenue.

Summary

Issues Involved:
1. Appeal filed by Revenue under Section 35G of the Central Excise Act, 1944 against the Tribunal's order.
2. Justification of Tribunal's decision in allowing the appeal by the assessee and setting aside the Commissioner's order.
3. Liability of the assessee engaged in the manufacture and sale of steel to pay Excise duty on conveyor belts removed as scrap.
4. Classification, name, and rate of duty applicable if such scrap items are subjected to payment of duty.

Analysis:

Issue 1: Appeal by Revenue
The judgment pertains to an appeal filed by the Revenue (Commissioner of Central Excise) under Section 35G of the Central Excise Act, 1944 against the order passed by the Tribunal. The Tribunal had allowed the appeal filed by the assessee and set aside the Commissioner's order dated 5/6-2-2004.

Issue 2: Justification of Tribunal's Decision
The primary issue for consideration was whether the Tribunal was justified in allowing the appeal by the assessee and setting aside the Commissioner's order. The High Court found that the Tribunal had not examined the issue in detail and had not considered various case laws relevant to the controversy. The Tribunal's decision was deemed cryptic and unreasoned, prompting the High Court to remand the case for a fresh decision.

Issue 3: Liability for Excise Duty
The main issue revolved around the liability of the assessee, engaged in the manufacture and sale of steel, to pay Excise duty on conveyor belts removed as scrap items. The Tribunal had demanded Excise duty on the scrap conveyor belts, classifying them under sub-heading 4004.00 of the Central Excise Tariff. However, the appellant argued that only goods resulting from manufacture attract Central Excise duty and that scrap items may not be liable for duty.

Issue 4: Classification and Rate of Duty
The judgment delved into the classification, name, and rate of duty applicable if the scrap conveyor belts were indeed subjected to payment of duty. The Tribunal's decision was criticized for not considering the relevant rules, case laws, and factual details necessary for a comprehensive decision on the matter.

In conclusion, the High Court allowed the appeal, set aside the impugned order, and remanded the case to the Tribunal for a fresh decision on merits strictly in accordance with the law. The parties were directed to present their arguments with full citation of case laws and relevant rules. The Tribunal was instructed to decide the appeal within six months from the date of parties' appearance, emphasizing the importance of a thorough examination of all legal aspects involved.