2012 (6) TMI 745 - AT - Central Excise

Duty demand - Non-compliance with the provisions of Section 35F of the Central Excise Act, 1944 - Fuel supplied by the Applicant was furnace oil and was used in the MSQ Plant and later capitalized - Held that - Commissioner (Appeals) has not decided the appeal on its merits. Therefore, learned Commissioner (Appeals) is directed to decide the case on its merits without insisting for any pre-deposit. All issues are kept open. Needless to say that a reasonable opportunity of hearing may be granted to the Appellant. The Appeal is allowed by way of remand - Decided in favour of assessee.

Summary

Issues:
Waiver of pre-deposit and penalty under Section 11AC of the Central Excise Act, 1944; Non-compliance with Section 35F; Classification of fuel as furnace oil or internal fuel oil (IFO); Appeal disposal without deciding on merits; Direction for Commissioner (Appeals) to decide the case on merits without pre-deposit.

Analysis:
The Applicant sought waiver of pre-deposit and penalty under Section 11AC, contending that their appeal was dismissed for non-compliance with Section 35F, without the merits being considered. They argued that the fuel supplied, used in the MSQ Plant, and later capitalized, was internal fuel oil (IFO) and not dutiable furnace oil (FO). They challenged the Department's allegation of contradictory claims regarding the nature of the fuel. They emphasized that capitalization is an accounting treatment governed by AS-10, unrelated to duty levy, making the demand confirmation and penalty imposition unsustainable. The Tribunal considered the arguments and decided to dispose of the Appeal without requiring pre-deposit, with the consent of both parties.

Upon review, the Tribunal found that the learned Commissioner (Appeals) had not addressed the appeal on its merits. Consequently, the Commissioner was directed to reconsider the case on its merits without insisting on pre-deposit. It was clarified that all issues were to be kept open, and the Appellant should be granted a reasonable opportunity for a hearing. The decision was made in favor of the Appellant by way of remand, with the Stay Petition also being disposed of. The operative part of the Order was pronounced in court, ensuring clarity and compliance with the directives provided by the Tribunal.