2008 (9) TMI 928 - AT - Central Excise

Summary

Issues involved: Demand of duty on mercerized yarn, imposition of penalty, denial of input-duty credit, appeal against penalty imposed on Director under Rule 26 of the Central Excise Rules, 2002.

Demand of duty on mercerized yarn: The appellants were engaged in the manufacture of mercerized cotton yarn and cleared the product without payment of duty during the disputed period. Mercerized yarn was dutiable during this period, although exempted before and after. The original authority confirmed the duty demand and imposed a penalty, which was upheld by the Commissioner (Appeals). The appeal was filed against this decision.

Denial of input-duty credit: The lower authorities rejected the assessee's prayer for input-duty credit on the grounds that procedural requirements were not followed, such as filing a declaration. The Tribunal found this denial unjustifiable, stating that a substantive right should not be denied due to procedural lapses. It was emphasized that procedure is a handmaid of justice, and the appellants should be allowed to utilize input-duty credit to pay the duty on the final product. The impugned order was set aside to the extent it denied input-duty credit to the appellants, and the appeals were allowed on this ground.

Appeal against penalty: Appeal No.E/760/2005 was filed by a Director of the company against the penalty imposed on him under Rule 26 of the Central Excise Rules, 2002. The Tribunal did not provide specific details on the outcome of this appeal in the summarized judgment.