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2010 (6) TMI 544 - AT - Central ExciseDemand of duty - Adjustment of duty - Before the Commissioner, the appellants had submitted their total duty liability for non payment of certain clearances - the Commissioner accepted the working furnished by the appellants but he refused to adjust the excess duty already paid for the reason that the excess payment pertained to clearances made under proper invoices - The assessee was not raising the matter of reassessment of the entire clearances following the cost construction method approved by the Apex Court in Ujagar Prints case for the first time before the Commissioner as found in the impugned order - Therefore, the basis for denying reassessment of duty paid clearances made during the material period and denying adjustment of duty from the excess payment adopted in the impugned order was actually not available to the adjudicating authority - Duty liability is vacated, penalty under Section 11AC is liable to be set aside. Demand - No demand can be sustained unless the same is based on a proposal in the Show Cause Notice and the assessee has been afforded adequate opportunity to present his case in defence - The Show Cause Notice is the foundation in the matter of levy and recovery of duty, penalty and interest as held by the Apex Court in the case of CCE v. Ballarpur Industries Ltd. 2007 -TMI - 1670 - SUPREME COURT OF INDIA cited by the appellants. - Decided in favor of assessee.
Issues Involved:
1. Clandestine removal and parallel invoices. 2. Availment of inadmissible benefit under SSI Notification. 3. Non-reversal of Modvat credit on inputs removed. 4. Demand for inadmissible SSI exemption. 5. Duty on goods said to have been destroyed. 6. Additional consideration and demand on turnover tax. Detailed Analysis: 1. Clandestine Removal and Parallel Invoices: The Tribunal initially set aside and remanded the issue of clandestine removal to the Original Authority, ordering a recalculation of duty liability based on the Ujagar Prints formula. The Commissioner confirmed a duty liability of Rs. 9,89,248/- and imposed equal penalties under Section 11AC and Rule 173Q/Rule 25 of CER. The appellants argued that excess duty paid (Rs. 24,55,273/-) should be adjusted against this liability. The Tribunal found that the Commissioner wrongly denied this adjustment, as the plea for reassessment was raised consistently. Consequently, the Tribunal vacated the demand of Rs. 9,89,248/- and the penalty under Section 11AC, reducing the penalty for rule violations to Rs. 2,00,000/-. 2. Availment of Inadmissible Benefit under SSI Notification: The Tribunal upheld the demand of Rs. 12,55,633/- for using a brand name, rejecting the appellants' plea of limitation and no intention to evade duty. The penalty under Section 11AC was modified to Rs. 1,25,000/-. 3. Non-Reversal of Modvat Credit on Inputs Removed: The Tribunal confirmed the demand of Rs. 1,45,913/- for non-reversal of Modvat credit on inputs returned and imposed a penalty of Rs. 14,500/-. 4. Demand for Inadmissible SSI Exemption: The Tribunal rejected the appellants' plea of limitation and sustained the demand for inadmissible SSI exemption. The penalty under Section 11AC was modified to Rs. 1,25,000/-. 5. Duty on Goods Said to Have Been Destroyed: The Tribunal confirmed the demand of Rs. 95,520/- for duty on goods claimed to be destroyed and imposed a penalty of Rs. 9,500/-. 6. Additional Consideration and Demand on Turnover Tax: The Tribunal confirmed the demand of Rs. 12,133/- and dropped the demand of Rs. 44,588/-, imposing a penalty of Rs. 1,200/-. Other Key Points: - The Tribunal set aside the demand of Rs. 14,66,025/- under Section 11D, as it was not based on a proposal in the Show Cause Notice, citing the principle that demands must be based on proposals in the Show Cause Notice (CCE v. Ballarpur Industries Ltd.). - The Tribunal allowed the adjustment of excess duty paid against the duty short paid, following precedents like Divya Enterprises Ltd. and Vinir Engineering Pvt. Ltd. Conclusion: The Tribunal's decision involved setting aside some demands and penalties, confirming others, and remanding certain issues for recalculation based on established legal principles. The appeals were disposed of accordingly.
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