2018 (11) TMI 1453 - AT - Central Excise

Closure of their factory due to disconnection of power supply - demand of central excise duty - Held that - It is an undisputed fact that power connection of the appellant unit was never restored during the period 01.09.97 to 31.03.98, after the disconnection on 30.09.97 - the Ld. Commissioner have erred in upholding the duty liability for the period 01.10.97 to 31.03.98. No interest and penalty was imposable. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Duty liability determination under Central Excise Act for the period September 1997 to March 1998.
2. Disconnection of power leading to factory closure and subsequent duty demand.
3. Delay in serving Order-in-Original affecting appeal filing.
4. High Court's direction to hear the appeal on merit.
5. Adjudication of duty liability and penalty imposition.
6. Auction of appellant's unit by the Department.
7. Applicability of interest and penalty as per Supreme Court ruling.
8. Refund of withheld amount and auction sale proceeds.

Detailed Analysis:

1. The Appellant, engaged in manufacturing ingots, faced duty liability determination under the Central Excise Act for the period from September 1997 to March 1998. The duty was determined at a specific amount per month under compounded levy provisions.

2. The factory experienced closure due to power disconnection, leading to a subsequent duty demand. Despite notifying the authorities promptly after power restoration and submitting explanations, a show cause notice was issued seeking a substantial demand.

3. Delay in serving the Order-in-Original impacted the appeal process, resulting in dismissal as time-barred initially. However, the High Court intervened, directing a fresh adjudication on merit by the Tribunal.

4. The Tribunal, upon rehearing, found that the duty liability for the period after power disconnection was unjustified. The Commissioner erred in upholding the duty liability for that period, and the appeal was allowed, setting aside the impugned order.

5. Despite confirming a reduced demand, the Adjudicating Authority imposed a penalty under the Central Excise Rules. However, the Tribunal noted a Supreme Court ruling stating that neither interest nor penalty were payable or imposable in such cases.

6. The Department auctioned the appellant's unit at a significantly lower value compared to its actual worth, and the withheld amount from the auction proceeds was a cause for concern.

7. The Tribunal directed the Department to refund the balance amount withheld for an extended period and to release the auction sale proceeds as a pre-deposit under the Act, entitling the appellant to consequential benefits and interest as per rules.

In conclusion, the Tribunal's judgment favored the appellant, highlighting errors in duty determination, penalty imposition, and auction proceedings, while emphasizing the applicability of legal precedents in interest and penalty matters.