2015 (4) TMI 811 - AT - Central Excise

Demand of differential duty - Classification under heading 730290 or under heading 3810 - Rate of duty - 18% or 15% - Held that - Department s allegation that during the period from June 1998 to February 1999, the appellant while paying duty to the Department @ 15% in respect of clearances of Thermit portion had recovered from customer railways @ 18% is based only on one tender document dated 27/5/98 to M/s IRCON wherein the rate of duty applicable in respect of supplies of Thermit portion is mentioned as 18%. However, it is seen that the M/s IRCON s letter accepting the tender does not mention the rate of duty and from some of the invoices issued to Railways during this period, which have been placed on record, it is seen that while the rate of duty is mentioned 18%, the duty actually shown in the invoices has been calculated @ 15%. In a number of other invoices though the pre-printed rate of duty is mentioned as 18%, but the same has been cancelled and modified as 15% and accordingly the duty had been charged @ 15% only. In our view, merely on the basis of the DRM, Ajmer s letter, the copy of which was not supplied to the appellant, it is not correct for the Department to conclude that during the period of dispute the appellant had recovered duty from railways @ 18%. - Matter remanded back - Decided in favour of assessee.

Summary

Issues:
Classification of Thermit portion under Tariff headings, Duty payment discrepancy, Allegation under Section 11D of Central Excise Act, 1944, Adjudication of show cause notice.

Analysis:
The case involved a dispute regarding the classification of Thermit portion under Tariff headings and the subsequent duty payment. Initially, the appellant classified the product under a specific heading and paid duty accordingly. However, the Deputy Commissioner later reclassified it under a different heading with a higher duty rate, leading to a series of appeals and counter-appeals resulting in conflicting decisions by various authorities.

The Department issued a show cause notice invoking Section 11D of the Central Excise Act, 1944, alleging that the appellant had recovered excess duty from customers during a specific period. This allegation was primarily based on a tender document mentioning a higher duty rate, despite the appellant maintaining that they charged duty at the lower rate in actual invoices issued to the railways. The Deputy Commissioner confirmed the demand under Section 11D based on a report from the Divisional Railway Manager, which the appellant claimed was not provided to them, leading to a denial of natural justice.

During the hearing, the appellant argued that they consistently charged duty at the lower rate in their invoices to the railways, despite occasional mentions of the higher rate due to pre-printed forms. The Department countered by relying on the DRM's letter, which allegedly confirmed the higher duty recovery rate. However, the Tribunal found discrepancies in the evidence presented and concluded that the Department's allegation was not substantiated.

Therefore, the Tribunal set aside the impugned order and remanded the matter to the original Adjudicating Authority for a fresh adjudication. The Authority was directed to thoroughly examine the invoices issued by the appellant, verify the actual duty recovery rates, and consider the appellant's submissions along with the DRM's letter. The Tribunal emphasized the importance of a fair assessment and timely resolution due to the age of the case.