2011 (1) TMI 114 - AT - Central Excise

Waiver of Pre-deposit - It is submitted that no credit on yarn was taken and that the credit taken on other inputs (dyes, packing materials, furnace oil) was proportionately reversed at the time of clearance of the final product - The ld.counsel has also claimed that the appellant s case is fully supported by the Hon ble High Court s judgment in the case of Commissioner or Central Excise vs Ashima Dyecot Ltd 2008 -TMI - 31832 - HIGH COURT GUJARAT - The impugned order are set aside and allow this appeal by way of remand

Summary

Issues:
Waiver of pre-deposit under Sec.11A of the Central Excise Act, denial of Notification benefit due to CENVAT credit availed on inputs, imposition of interest and penalties, serious infirmities in the impugned order, failure to consider plea of limitation, benefit of case law not available, appeal allowed by way of remand.

Detailed Analysis:

1. Waiver of Pre-deposit:
The application sought waiver of pre-deposit of Rs. 82,67,354 demanded under Sec.11A of the Central Excise Act. The appellant had availed full exemption under Notification No.30/2004-CE for their final product, Terry Towel, with a condition of not availing CENVAT credit on inputs/capital goods. The department issued show-cause notices for recovery of duty, interest, and penalties, which were initially dropped but later appealed by the Revenue. The Commissioner (Appeals) allowed the appeal without quantifying the demand or imposing penalties, leading to a fit case for remand to the lower appellate authority.

2. Denial of Notification Benefit:
The appellant argued compliance with the Notification condition based on a report by the Central Excise Range Supdt., claiming no credit on yarn and proportionate reversal of credit on other inputs during product clearance. The appellant's case was supported by a High Court judgment and other case laws. The infirmities in the impugned order included serious allegations, denial of Notification benefit, suppression of facts, and imposition of interest and penalties, all dropped by the original authority.

3. Failure to Consider Plea of Limitation:
The Commissioner (Appeals) failed to address the plea of limitation raised by the appellant, despite the appellant periodically filing returns disclosing all relevant facts to the department. The records submitted by the appellant indicated no suppression of material facts, negating the application of the extended period of limitation. The failure to examine this aspect provided a ground for remand.

4. Benefit of Case Law Not Available:
The Commissioner (Appeals) did not have the benefit of the High Court judgment cited by the appellant, as it was not in existence when the impugned order was passed. This lack of availability of relevant case law was noted as a factor in the decision.

5. Appeal Allowed by Way of Remand:
The Tribunal set aside the impugned order and allowed the appeal by way of remand, directing the Commissioner (Appeals) to reconsider all issues afresh, providing both parties with a reasonable opportunity to be heard.

6. Conclusion:
The stay application was also disposed of, with the Tribunal's decision pronounced in court, emphasizing the need for a fresh consideration of all issues by the lower appellate authority.