1999 (10) TMI 85 - CGOVT - Central Excise

Summary

Issues:
1. Confirmation of demand of rebate under Section 11A(1) of the CEA, 1944
2. Imposition of penalty under Section 11AC
3. Imposition of interest under Section 11AB
4. Imposition of personal penalty
5. Dismissal of appeal for non-compliance of pre-deposit order
6. Examination of claims and procedural compliance
7. Allegations of fraudulent means in obtaining rebate
8. Recommendations by C.B.I. for closure of the case
9. Circular issued by CBEC for relaxation of conditions for rebate claims

Analysis:
1. The central issue in the case pertains to the confirmation of the demand of rebate under Section 11A(1) of the Central Excise Act, 1944. The Additional Commissioner had confirmed the demand of Rs. 12,93,309/- as rebate and imposed a consolidated penalty of Rs. 12,93,310/- under Section 11AC. Additionally, interest at 20% p.a. was imposed under Section 11AB, and personal penalties were imposed on the individuals. The Commissioner (Appeals) dismissed the appeal due to non-compliance with the order for pre-depositing the disputed amount.

2. During the hearing, the applicants argued that they had complied with all requirements and that there was no fraudulent activity involved in obtaining the rebates. They emphasized that the cutting and repacking were done under the supervision of central excise officers, and audits were conducted. They also cited case laws to support their arguments and highlighted that there was no suppression, misstatement, or concealment. They contended that retrospective interest and penalty cannot be imposed as the provisions were introduced later.

3. The main contention revolved around whether fraudulent means were employed to obtain the rebate. The government noted that the applicants procured fabrics, which were cut and repacked under the supervision of excise officers. The sealing and endorsement processes were meticulously followed, indicating compliance with procedures. The C.B.I. recommended closing the case, citing systemic failures and deviations from established rules over a prolonged period.

4. The circular issued by the CBEC provided relaxation for rebate claims made before a certain date, emphasizing compliance with specific conditions. The government, considering the lack of incriminating evidence and the involvement of excise officers in sealing the goods, decided to set aside the lower authority's orders and provide consequential relief to the applicants.

In conclusion, the judgment addressed the issues of rebate confirmation, penalty imposition, compliance with procedures, allegations of fraudulent means, recommendations by investigative agencies, and circulars providing relaxation for rebate claims. The decision favored the applicants based on the lack of evidence supporting fraudulent activities and the involvement of excise officers in the process.