2011 (3) TMI 1101 - AT - Central Excise

Condition of pre-deposit - the appellants have cleared their final products against CT-3 certificate to another 100% EOU, without payment of duty - As per the appellants, the said goods were re-warehoused at the consignee s end however, as the same were not found fit by the consignee, they rejected the same - Held that - Whether rewarehousing certificates establishing the fact of receipt of goods by the consignee is available or not, is required to be examined - Further, the fact that whether such rejected goods were actually received back by the appellants in their factory is also required to be verified and to be examined by scrutiny of the modvat account maintained by the appellants - set-aside the impugned order and remand the matter to original adjudicating authority for fresh decision, after verifying all the above factual aspects.

Summary

Issues:
1. Pre-deposit of balance amount of duty and penalty.
2. Allegation of taking modvat credit without proper intimation.
3. Liability for payment of duty on goods initially cleared without payment.
4. Verification of rewarehousing certificates and modvat credit availed.

Analysis:

1. The judgment addresses the issue of pre-deposit of balance amount of duty and penalty. The appellants had already deposited a partial amount, which was considered sufficient under Section 35F. The tribunal dispensed with the condition of pre-deposit of the balance amount and proceeded to decide the appeal with the consent of both parties.

2. The case involved an allegation that the appellants had taken modvat credit without proper intimation to the Revenue authorities. The show cause notice claimed that the rejected goods were received back by the appellants, and modvat credit was availed without accounting for the same in the statutory books. The appellants disputed this claim during adjudication, stating that the rejected goods were never received back, and no modvat credit was availed.

3. The issue of liability for payment of duty on goods initially cleared without payment arose. The original adjudicating authority confirmed the demand based on the admission made by the appellant's representative. The Commissioner (Appeals) upheld this decision, holding the appellant liable for duty on the goods initially cleared without payment. However, the appellants contested this, stating that no duty was paid at the time of removal, and therefore, no duty liability should exist.

4. The judgment highlighted the importance of verifying factual aspects such as rewarehousing certificates and modvat credit availed. The tribunal set aside the previous order and remanded the matter to the original adjudicating authority for a fresh decision. The verification of rewarehousing certificates, examination of whether rejected goods were received back, and scrutiny of the modvat account were deemed necessary for a comprehensive assessment.

In conclusion, the judgment delves into various issues concerning pre-deposit requirements, modvat credit allegations, duty liability on initially cleared goods, and the necessity of factual verification for a fair decision. The remand to the original adjudicating authority emphasizes the importance of examining all relevant factual aspects before reaching a final conclusion.