2011 (9) TMI 350 - AT - Central Excise

Notification 58/97-CE dated 1.9.97 - input used by the appellant were procured from a manufacturer who was subject to compounding levy under section 3 A of Central Excise Act 1944 did not pay the duty duly and claim of suffering of duty on those goods was found to be not in consonance with the Notification hence, disallowed the claim - Input in question was not in dispute which enjoyed deemed credit having fallen into the class of the goods - relied on two certificate issued by Superintendant of Central Excise - violation of conditions of the Notification for no declaration of payment of duty when the invoices were issued - Decided that invoke sub-rule 4 of Rule 57 I of Central Excise Rules 1944 sub-rule there should necessarily be a finding about presence of ingredients of evasion prescribed therein - Finding no existence of ingredients of any intention to evade duty, the appellant gets total relief in respect of penalties - Appeal partly allowed.

Summary

Issues:
Interpretation of Notification 58/97-CE dated 1.9.97 for deemed credit claim.
Competency of Superintendant to issue certificates for deemed credit.
Compliance with conditions of Notification No.50/97-CE dated 30th August, 1997 for deemed credit.
Imposition of penalties under section 57 I (4) of the Central Excise Rules, 1944.

Interpretation of Notification 58/97-CE:
The judgment revolved around the proper interpretation of Notification 58/97-CE dated 1.9.97 for deemed credit claim. The Commissioner (Appeals) found that the adjudicating authority had allowed the claim without proper interpretation, leading to the Revenue's appeal being allowed. The conditions of the Notification were deemed safeguard measures to protect Revenue. The appellant's claim of suffering duty on goods procured from a manufacturer under compounding levy without proper duty payment was found to be against Notification requirements. The appellate authority upheld the disallowance of the claim, citing the lack of proper payment of duty on the goods.

Competency of Superintendant for Deemed Credit Certificates:
The issue of the Superintendant issuing certificates for deemed credit was raised. The judgment highlighted that the Superintendant was not recognized as an Adjudicating Authority or Central Excise Officer under the Central Excise Act 1944. The certificates issued by the Superintendant were deemed invalid as they did not originate under law, making them inadmissible as evidence. The judgment recommended taking appropriate action against the Superintendant for issuing certificates not recognized by law.

Compliance with Notification No.50/97-CE for Deemed Credit:
The judgment extensively analyzed the conditions of Notification No.50/97-CE dated 30th August, 1997 for deemed credit. The Notification outlined various requirements for availing deemed credit, including the classification of goods eligible for credit, quantum of benefits, and conditions for utilizing the credit. It emphasized that belated payment of duty on compounding levy inputs did not entitle the appellant to deemed credit. Compliance issues arose due to the lack of declaration of duty payment on invoices, leading to the denial of deemed credit. The judgment stressed the importance of lawful declaration and payment of duty to support the benefit granted by the Notification.

Imposition of Penalties under Central Excise Rules:
Regarding the imposition of penalties under section 57 I (4) of the Central Excise Rules, 1944, the judgment clarified that penalties were imposed for non-compliance with the Notification requirements. However, to invoke the penalty provision, there must be a finding of elements of evasion. As the appellate order failed to establish any intention to evade duty, the penalties were waived, providing total relief to the appellant in respect of penalties. The appeals were partly allowed, confirming the duty but waiving penalties in all five cases.