2001 (7) TMI 206 - AT - Central Excise

Summary

Issues:
1. Duty demand confirmation invoking Rule 9(2) and proviso to Section 11A of the Act.
2. Imposition of penalty under Rule 9(2) and 173Q of C.E. Rules read with Section 11AC of C.E. Act, 1944.
3. Short levy due to wrong classification of goods.
4. Non-expunging of Modvat credit on inputs.
5. Non-inclusion of service charges in assessable value determination.

Analysis:

1. The appeals arose from an Order-in-Original confirming duty demand of Rs. 1,82,712.12 under Rule 9(2) and Section 11A proviso. The Commissioner imposed a penalty under Rule 9(2) and 173Q of C.E. Rules with Section 11AC of C.E. Act, 1944.

2. The appellants did not appear despite notices, leading to consideration based on their submissions and grounds. The Tribunal directed pre-deposit of the entire duty amount, which the appellants complied with. The issues included short levy, non-expunging of Modvat credit, and non-inclusion of service charges in assessable value.

3. The Tribunal found that the appellants had accepted the offense related to short levy and wrong classification due to lack of knowledge. The only remaining issue was the inclusion of service charges in the assessable value, which was disproved based on evidence gathered during investigations with customers.

4. The Tribunal concluded that the practice of raising additional invoices for installation/training charges was to reduce assessable value and evade duty, as no actual services were rendered. The appellants suppressed facts with the intention to evade duty, justifying the demand and penalty imposition.

5. While confirming the duty demand, the Tribunal noted an error in imposing a penalty under Section 11AC, which was introduced after the relevant period. The matter was remanded to the Commissioner for re-determination of penalty only on the violation of Rule 173Q of C.E. Rules, granting the appellants an opportunity for a hearing.

6. The Commissioner's order was upheld on merits, except for the penalty imposition error. The appeals were disposed of with confirmation of demands and re-adjudication of penalty, highlighting the need for compliance with the correct legal provisions for penalty determination.