2000 (1) TMI 108 - AT - Central Excise

Summary

Issues:
1. Waiver of deposit of Rs. 23.10 lakhs, penalty of Rs. 20 lakhs under Rule 173Q, and penalty of Rs. 20,000 under Rule 209A.
2. Redemption fine of Rs. 25,000 for confiscated assets.

Analysis:
1. The dispute revolves around the denial of duty credit on inputs used in manufacturing final products, classified as non-exempted medicaments under Heading 3003.20 instead of patent medicaments under Heading 3003.10. The applicant argues that the extended period for demand does not apply as the exported goods were approved under the correct classification. They also contest the penalty imposition under Rule 173Q, citing lack of mens rea. The department, however, alleges mis-declaration and suppression of facts in the classification list, arguing that the applicant failed to clarify the dual use of inputs for both exempted and dutiable products.

2. The Tribunal finds a prima facie discrepancy in the classification of goods for export and home consumption, indicating potential deliberate misclassification. The applicant's claim that credit could be taken due to goods being exempted under bond, even if no duty was payable for home consumption, is not readily accepted. The Tribunal notes the department's approval of different classifications for the same goods during export and domestic clearance, raising doubts on the applicant's intent and knowledge of the misclassification.

3. The Tribunal rejects the argument that the department should have been aware of credit reversal from RT-12 returns, emphasizing the applicant's responsibility to provide clarity. It upholds the applicability of Rule 173Q due to prima facie evidence of intentional misclassification. The contention that Rule 57F justifies credit utilization even for non-dutiable final products is dismissed, affirming Rule 57C's restriction on credit for duty-exempt goods.

4. Despite the applicant's plea of financial hardship, citing losses and reduced operations, the Tribunal directs a deposit of Rs. 15 lakhs towards duty and penalties within a month, considering the applicant's reserves and operational capacity. Upon compliance, the remaining amount is waived, and recovery is stayed, indicating a balanced approach considering both financial constraints and regulatory obligations.

In conclusion, the judgment addresses the complexities of duty classification, credit utilization, and penalty imposition, balancing the applicant's circumstances with regulatory compliance to ensure fair treatment and accountability in the customs and excise context.