2004 (6) TMI 220 - AT - Central Excise

Summary

Issues involved:
1. Applicability of Section 4A of the Central Excise Act for duty payment on Shampoo Sachets.
2. Contravention of provisions of Section 4 and Rule 173-F of Central Excise Act/Rules.
3. Validity of demand notice for duty short paid.
4. Interpretation of Circulars and applicability of Supreme Court decisions.
5. Legality of Commissioner (Appeals) decision confirming the demand.

Analysis:

1. Applicability of Section 4A of the Central Excise Act:
The appellant initially cleared Shampoo Sachets under Section 4 valuation but later, due to notifications, the duty was required to be paid as per MRP under Section 4A. The Range Superintendent directed the appellant to discharge duty under Section 4A, which was complied with initially. However, subsequent instructions led to a reversion to Section 4 valuation. The demand notice was issued for duty short paid during the period of transition.

2. Contravention of provisions of Section 4 and Rule 173-F:
The demand notice alleged contravention of Section 4 and Rule 173-F, stating that duty was paid incorrectly under Section 4A during a specific period. The lower authority confirmed the demand under section 11(A) as duty short paid.

3. Validity of demand notice for duty short paid:
The demand notice highlighted the discrepancy in duty payment under Section 4 and Section 4A for the specified period. The Commissioner (Appeals) found that the appellant had followed the directions of the Range Superintendent under protest. However, the Commissioner upheld the demand based on retrospective legal provisions.

4. Interpretation of Circulars and Supreme Court decisions:
The appellant argued that the payments were made based on the Range Superintendent's instructions and subsequent changes, which were in line with CBEC views. The appellant cited Supreme Court judgments to support their position that the demands were not sustainable due to settled legal principles.

5. Legality of Commissioner (Appeals) decision:
The Tribunal found merit in the appellant's arguments that the demands were not valid as they were made in accordance with the instructions received. The Tribunal allowed the appeal, stating that the orders had gone beyond the notice and were bad in law, ultimately ruling in favor of the appellant.

In conclusion, the Tribunal allowed the appeal, emphasizing that the demands for duty short paid were not sustainable due to the circumstances surrounding the instructions received and the legal principles established by previous court decisions.