2017 (5) TMI 805 - AT - Central Excise

Shortages and excesses of goods - demand on the basis of electricity consumption - Held that - it emerges that there is a dispute which cannot be reconciled without examination and verification at the level of original adjudicating authority. Therefore, it is right that the matter is remanded for the limited purpose of examining the issue that how much demand is based only on electricity consumption which cannot be upheld against the appellant - if the penalty imposed on other appellant, M/s. Fairdeal Agencies is only on account of the disputed demand, which is based only on electricity consumption, then this penalty will not survive - appeal allowed by way of remand.

Summary

Issues:
1. Dispute regarding demand based on electricity consumption for the period 1997-1998.
2. Penalty imposition on a trader based on the disputed demand.

Analysis:

Issue 1: Dispute regarding demand based on electricity consumption for the period 1997-1998
The case involves two appellants, M/s. R K Polytubes and M/s. Fairdeal Agencies, appealing against the order-in-original passed by the Commissioner of Central Excise, Raipur. M/s. R K Polytubes, a manufacturer of plastic pipes, disputed a part of the demand amounting to ?3,20,438 for the period 1997-1998, out of the total confirmed demand of ?13,11,438 for the period 1997-1999, claiming it was solely based on electricity consumption. The Tribunal had previously remanded the matter to the Commissioner for quantifying the duty and penalty liabilities based on earlier observations. The appellants argued that the demand solely based on electricity consumption cannot be upheld, as previously held by the Tribunal in its order dated 17.1.2014.

Issue 2: Penalty imposition on a trader based on the disputed demand
M/s. Fairdeal Agencies, a trader in the subject matter, was imposed a penalty of ?2 lakhs based on the disputed demand. The counsel for M/s. Fairdeal Agencies contended that they were wrongly penalized, emphasizing their role as a trader only. The Revenue's counsel argued that the duty demand linked to electricity consumption for the period 1997-1998 was already dropped following the Tribunal's earlier order. The Tribunal concluded that the dispute regarding the demand based solely on electricity consumption needs further examination by the original adjudicating authority. The penalty imposed on M/s. Fairdeal Agencies, if solely based on the disputed demand related to electricity consumption, would not be sustainable. Thus, the matter was remanded for fresh adjudication to the original adjudicating authority, allowing both appellants an opportunity to present their case.

In summary, the Tribunal allowed both appeals by remanding the case for a fresh adjudication to determine the demand based on electricity consumption and the penalty imposition, ensuring a fair opportunity for both appellants to present their arguments before the original adjudicating authority.