2016 (11) TMI 1093 - AT - Central Excise

Recovery of duty - wrong availment of the benefit of N/N. 4/97-CE dt.01.03.1997 - N/N. 4/1997-CE, dt.01.03.1997 allows concessional rate of duty subject to fulfillment of condition, that is, appropriate rate of duty of excise or additional duty leviable under the Customs Act has been paid on the yarn - failure to provide the evidence to the effect that appropriate duty was paid on the input yarn as required - Held that - the learned Advocate for the Appellant claims to be in possession of the evidences, which in our opinion, should be verified and both sides agree for such a course of action. In the result, we set aside the impugned order and remit the matter to the original Adjudicating authority to decide the issues afresh in the light of the evidences on record, the evidences that would be produced by the Appellant and also the principle of law settled in this regard. All issues are kept open. The appeal is allowed by way of remand.

Summary

Issues:
- Benefit of Notification No.4/97-CE dt.01.03.1997
- Burden of proof on duty paid character of input yarn
- Duty of excise on steam used in the dyeing process
- Imposition of penalty under Rule 173Q(i) of Central Excise Rules,1944

Analysis:

1. Benefit of Notification No.4/97-CE dt.01.03.1997:
The appeal challenged OIA confirming demands for duty payment and penalty under Notification No.4/97-CE. The Appellant, engaged in manufacturing Dyed Yarn, failed to provide evidence of appropriate duty payment on input yarn as required by the notification. The Appellant argued that the burden to prove non-duty paid yarn shifted to Revenue post the Dhiren Chemical Industries case. The Appellant now claims possession of relevant evidence supporting duty payment on the yarn. The Tribunal found the issue centered on whether the Appellant could establish the duty paid character of the input yarn. Consequently, the matter was remanded for verification of the newly procured evidence.

2. Burden of proof on duty paid character of input yarn:
The Appellant contended that due to the prevailing legal principle at the relevant time, the burden to prove non-duty paid yarn rested with the Revenue. However, post the Dhiren Chemical Industries case, the burden shifted to the assessee to establish duty paid character of the input. The Appellant argued that they now possessed evidence demonstrating the discharge of appropriate excise duty on the yarn used for dyeing. The Tribunal acknowledged the change in legal principle and directed the Adjudicating authority to decide the matter afresh based on the evidences provided.

3. Duty of excise on steam used in the dyeing process:
Apart from the duty payment issue on yarn, a separate demand of duty on steam used in the dyeing process was also raised. The Appellant was alleged to have failed to discharge duty on the steam used during a specific period. The Tribunal did not delve into this issue in detail but remanded the case to the Adjudicating authority for a comprehensive review along with the main issue of yarn duty payment.

4. Imposition of penalty under Rule 173Q(i) of Central Excise Rules,1944:
The Adjudicating authority imposed penalties under Rule 173Q(i) of Central Excise Rules,1944 read with Section 11AC of Central Excise Act. The Tribunal did not address the penalty aspect in detail in this judgment but focused on the primary issue of duty payment. The matter was remanded for a fresh decision, leaving all issues open for consideration.

In conclusion, the Tribunal allowed the appeal by remanding the case to the Adjudicating authority for a reevaluation based on the newly procured evidence, the legal principles involved, and all issues raised during the proceedings.