2017 (1) TMI 870 - AT - Central Excise

Return of defective goods - goods not found suitable for remaking was removed as scrap and duty paid on the same - differential duty with interest was paid on being pointed out - whether the SCN issued is hit by the provisions of Section 11A(2)of Central Excise Act, 1944? Held that - there is no case of any deliberate suppression, fraud etc. in the facts and circumstances of this case. Further, the extended period of limitation is not invokable - the SCN is hit by the provisions of this section 11A Sub-section 2 of Central Excise Act, 1944 which provides that wherein assessee on his own ascertainment, or on being pointed out by the Central Excise Officer, deposits the differential duty or duty short paid under intimation to the authority, then no show cause was required to be issued and the matter should stand closed - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Whether the appellant, a manufacturer of Copper Winding Wires, is liable to reverse Cenvat credit on returned goods removed as scrap?
- Whether the Show Cause Notice issued is valid under Section 11A(2) of the Central Excise Act, 1944?

Analysis:

Issue 1:
The appellant, a manufacturer of Copper Winding Wires, received defective products back for rectification or remaking. After inspection, some goods were reprocessed and cleared on payment of duty, while unsuitable parts were removed as scrap. The Revenue contended that the appellant should reverse Cenvat credit on goods removed as scrap. The appellant calculated and paid the differential duty with interest. The Show Cause Notice demanded further duty payment, which the appellant contested. The Tribunal noted that all transactions were recorded, and the appellant admitted to removing goods as scrap after inspection. The Tribunal found no deliberate suppression or fraud, and the extended limitation period was not applicable. Citing Section 11A(2) of the Central Excise Act, the Tribunal held that since the appellant voluntarily paid the differential duty, no Show Cause Notice was necessary, and the matter should be closed.

Issue 2:
The Tribunal considered whether the Show Cause Notice was valid under Section 11A(2) of the Central Excise Act. It was established that the appellant, upon self-ascertainment or upon notification by the Central Excise Officer, had paid the differential duty with interest. In such cases, as per the provisions of Section 11A(2), no Show Cause Notice was required to be issued. The Tribunal concluded that the Show Cause Notice was hit by the said provisions, and the matter should stand closed. Consequently, the Tribunal allowed the appeal, setting aside the impugned order and granting the appellant any consequential benefits as per the law.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT ALLAHABAD highlights the issues, arguments, and conclusions regarding the liability of the appellant for reversing Cenvat credit and the validity of the Show Cause Notice under Section 11A(2) of the Central Excise Act, 1944.