2017 (2) TMI 1261 - AT - Central Excise

Validity of demand proceedings - abatement application - Compounded levy scheme - Held that - abatement application was filed on 19-4-2000 whereas demands under show cause notices were adjudicated on 30-9-2003 without passing any order on the abatement application, therefore demand was premature. As regard the abatement application, Commissioner instead of deciding abatement, though discussed in the findings of the order about the denial of abatement no order was passed as it clearly come out from the operative portion of the order. I am surprise to note that without any show cause notice on the application of abatement, ld. Commissioner have passed order of the demand, interest and penalty which is not permissible in law. The matter is remanded to the original adjudicating authority, who adjudicated three show cause notices, who is directed to pass de novo adjudication order only after disposal of abatement application by the Commissioner - appeal allowed by way of remand.

Issues involved: Premature demand due to abatement application timing, legality of penalty and interest under compounded levy scheme, applicability of sub-rules under Rule 96ZP, correctness of order without deciding abatement application.

Analysis:

1. Premature Demand and Abatement Application: The appellant challenged the legality of the demand made before deciding the abatement application. The Counsel argued that the proceedings of demand on show cause notices were premature as the abatement application was not addressed before confirming the demand, penalty, and interest. The Judge noted that the abatement application was filed before the demands under show cause notices were adjudicated. The Commissioner failed to pass any order on the abatement application, making the demand premature. The Judge found it surprising that the Commissioner passed orders on demand, interest, and penalty without addressing the abatement application, which is impermissible in law. Consequently, the Judge set aside both impugned orders due to this procedural flaw.

2. Legality of Penalty and Interest under Compounded Levy Scheme: The appellant argued that penalty and interest were not chargeable under the compounded levy scheme as per a Supreme Court judgment. The Counsel cited the case of Shree Bhagwati Steel Rolling Mills v. Commr. of Central Excise to support this argument. However, the Revenue representative contended that the abatement opted under Rule 96ZP(3) did not allow for the application of sub-rule (2) and referred to relevant judgments. The Judge did not delve deeply into this issue as the primary reason for setting aside the orders was the failure to address the abatement application.

3. Applicability of Sub-Rules under Rule 96ZP: The Revenue argued that sub-rule (2) was not applicable to the compounded levy under Rule 96ZP(3) and cited cases to support this position. However, the Judge did not extensively discuss this argument due to the procedural irregularity in addressing the abatement application.

4. Correctness of Order without Deciding Abatement Application: The Judge emphasized the importance of addressing the abatement application before passing orders on demand, interest, and penalty. The failure to decide the abatement application rendered the orders unsustainable in law. Consequently, the Judge set aside the impugned orders and remanded the matters to the original adjudicating authorities for fresh consideration. The authorities were directed to pass de novo adjudication orders only after disposing of the abatement application, considering the judgments cited by both parties and providing the appellant with a sufficient opportunity for a personal hearing.

In conclusion, the judgment primarily focused on the procedural irregularity of passing orders without deciding the abatement application, leading to the setting aside of the impugned orders and remanding the matters for fresh consideration. The issues of penalty and interest under the compounded levy scheme and the applicability of sub-rules were not extensively discussed due to the procedural flaw identified in the case.

← Previous Next →