2012 (6) TMI 428 - AT - Central Excise

Removal of chemical solvent/industrial chemicals without raising any central excise invoice or paying any central excise duty assessee contested that he was unaware that central excise duty is to be paid on manufacture of the chemical solvent since only physical mixing of various inputs is involved in their case - Commissioner(Appeals) accepted the classification of the goods and set aside the demand and penalty - Held that - At no stage the assessee informed the department regarding the activity undertaken by them for manufacture of industrial solvents - they have been filing classification declarations from time to time but have not been able to show that they have disclosed in those declarations about the activities undertaken by them- since assessee have not been able to establish that they had bona fide belief as they have not been able to show that they had approached to the department or disclosed these activities undertaken by them Comm.(A) has not given any finding on this aspect and he has straightway drawn inference that the respondent s CENVAT Credit is more than the duty liability of the respondent - the case is remanded to the Commissioner(Appeals) to decide the issue afresh in favour of Revenue by way of remand.

Summary

Issues:
- Appeal against order-in-appeal setting aside lower adjudicating authority's decision confirming proposals in Show Cause Notice.
- Contention on duty confirmation, unwarranted inference, suppression allegation, and voluntary deposit.
- Bona fide belief on duty payment, invocation of extended period, and penalty imposition.
- Failure to inform department about manufacturing activities, lack of bona fide belief, and examination of penalty imposition.

Analysis:
1. The appeal was filed by the Revenue against the order-in-appeal setting aside the decision of the lower adjudicating authority confirming the proposals in the Show Cause Notice. The case involved the manufacture of Alkyd Resin falling under chapter 3814 of C.E.T.A., 1985. The central excise officer found discrepancies in the respondent's activities related to the removal of chemical solvent without paying central excise duty or maintaining required records.

2. The department contended that the Commissioner(Appeals) accepted the goods' classification but did not confirm the duty due, made unwarranted inferences, and failed to consider suppression allegations and voluntary deposits. On the other hand, the respondent argued a bona fide belief in not owing duty due to different rates on inputs and finished goods, along with maintaining production records privately.

3. The Tribunal observed that the respondents failed to inform the department about their manufacturing activities despite being registered for Central Excise and claiming S.S.I. benefits. The lack of disclosure and failure to establish a bona fide belief were noted. The Commissioner(Appeals) was criticized for not addressing these critical aspects and drawing conclusions based on incomplete information.

4. Consequently, the Tribunal remanded the case to the Commissioner(Appeals) for a fresh decision, keeping all issues open for examination. Both parties were allowed to submit additional documents, ensuring a fair opportunity for the respondents. The impugned order was set aside, and the Revenue's appeal was allowed for further review and consideration.