2014 (4) TMI 372 - AT - Central Excise

Remission of duty - Commissioner allowed remission - After grant of remission assessee destroyed goods on which credit was availed - After destruction, Revenue issued SCN that remission was granted erroneously - Held that - Prima facie, the Deputy Commissioner s order granting remission to the assessee was amenable to review, but it was not reviewed in the Department. That order was carried into effect with the destruction of the goods by the assessee. The goods consequently were not available for removal from the factory. Rule 16(2) presupposed a removal of the goods from the factory - Therefore, appellant can be said to have made out a prima facie case against the impugned demand - Decided in favour of assessee by way of remand.

Summary

Issues:
1. Breach of principles of natural justice by the Commissioner (Appeals).
2. Prima facie case on merits regarding remission of duty and destruction of goods.

Analysis:

Issue 1: Breach of principles of natural justice by the Commissioner (Appeals)
The judgment addresses the undue haste shown by the Commissioner (Appeals) in dealing with the appellant's case, leading to a breach of the principles of natural justice. The appellant failed to make the predeposit within the time granted by the appellate authority due to delayed receipt of the appellate Commissioner's order. The impugned order was passed without considering the party's modification application, indicating a lack of reasonable opportunity for the party to be heard. The judgment concludes that the impugned order is set aside on the grounds of negation of natural justice.

Issue 2: Prima facie case on merits regarding remission of duty and destruction of goods
The appellant, a manufacturer of medicaments, received defective goods returned by the buyer for remaking, refining, or destruction. The appellant took CENVAT credit on the duty paid for these goods and subsequently sought remission of duty and permission for destruction. The Deputy Commissioner allowed both requests, and the goods were destroyed. However, the Department issued a show-cause notice alleging errors in the remission of duty. The judgment highlights inconsistencies in the impugned demand, questioning whether the appellant should be required to pay any duty on the goods. It notes that the Deputy Commissioner's order was not reviewed, and the goods were not available for removal, raising doubts about the demand's validity. The judgment finds that the appellant has made out a prima facie case against the impugned demand.

In conclusion, the judgment sets aside the Commissioner (Appeals)'s order, allowing the appeal by way of remand for a decision on merits regarding the appellant's appeal against the Order-In-Original. The appellant is not required to make any predeposit, and they are entitled to a reasonable opportunity to be heard. The stay application is also disposed of in light of the judgment's findings.