2016 (4) TMI 444 - AT - Central Excise

Demand of duty and imposition of penalty - Revenue has not filed any appeal against order in original - Held that - the revenue cannot go beyond the duties demanded and penalties imposed in the said order. The Commissioner in the impugned order has gone much beyond that by not only increasing the demand four fold but also enhanced the penalties many fold. Thus the commissioner s order is not proper. Therefore, the impugned order is set aside and the matter is again remanded for fresh adjudication. - Appeal disposed of

Summary

Issues:
1. Interpretation of Rule 57F(2) of the Central Excise Act regarding modvat credit.
2. Application of Notification No. 175/86 and Rule 57B of the Central Excise Rules.
3. Validity of the remand orders from the Hon'ble Bombay High Court.
4. Proper imposition of penalties under Central Excise Rules.

Analysis:
1. The case involved the initiation of proceedings against the appellants for the alleged misuse of modvat credit under Rule 57A of the Central Excise Rules. The dispute centered around the ownership of goods sent for job work and the subsequent claim of enhanced modvat credit. The Tribunal initially allowed the appeals filed by the appellants, setting aside the demand. However, subsequent challenges from the Revenue led to remand orders from the Hon'ble Bombay High Court, emphasizing a fresh decision on specific questions related to the transfer of raw materials to job workers and the eligibility for modvat credit.

2. The Commissioner, in response to the remand orders, confirmed the demand for Central Excise duty, disallowed modvat credit, and imposed penalties on the appellants. However, discrepancies arose concerning the scope of the show-cause notice and the Commissioner's authority to increase the demand and penalties beyond the original Order-in-Original (OIO) without Revenue's challenge. The Commissioner's failure to address the specific questions referred to him and the deviation from the charges in the show-cause notice raised concerns about the validity of the imposed penalties and the enhanced demand.

3. The Tribunal, upon review, found that the Commissioner had not adequately addressed the issues highlighted in the remand orders and had exceeded the authority granted by the original OIO. As a result, the impugned order was set aside, and the matter was remanded for fresh adjudication, emphasizing the necessity to address the specific matters outlined in the earlier remand order. The Tribunal highlighted the importance of adhering to the legal framework and ensuring proper imposition of penalties under the Central Excise Rules, ultimately disposing of the appeal with a directive for a comprehensive reconsideration of the case.