1985 (7) TMI 279 - AT - Central Excise

Summary

Issues:
- Allegation of availing proforma credit not admissible
- Allegation of removal of finished excisable goods without payment of duty
- Allegation of suppression of facts
- Time-barred demand for duty
- Imposition of penalty

Analysis:

The appeal before the Appellate Tribunal CEGAT, New Delhi, challenged Order-in-Original No. 30/T.I.15-A/84 issued by the Additional Collector of Central Excise, Indore. The appellants were accused of availing proforma credit on countervailing duty paid on imported goods, which was deemed inadmissible under Central Excise provisions. It was alleged that they removed finished excisable goods without paying the equivalent duty, contravening regulations. The appellants argued that they had permission to avail proforma credit for all inputs, not limited to specific tariff items. They contended that the demand for duty, issued after the statutory period of six months, was time-barred and illegal, as no fraud or suppression of facts was proven. The appellants cited various case laws to support their position, emphasizing that proper procedures were followed, and the extended period of five years could not be invoked.

Regarding the failure to submit form D-3 for a consignment of Desmophen, the appellants argued that as long as the prescribed procedures were substantially followed, denial of credit was unwarranted. They cited case laws to support their stance. The appellants also challenged the imposition of a penalty of Rs. 5,000, stating it was not legally justified. The department reiterated its position that the appellants were not entitled to proforma credit for goods classified under Tariff Item 68 and that the failure to submit form D-3 was a violation.

After considering the submissions and evidence, the Tribunal found that the demand for duty, beyond the normal time limit, lacked justification for invoking the extended period. The department failed to substantiate allegations of fraud or suppression of facts. The Tribunal noted that the appellants acted in accordance with departmental advice and complied with procedures for proforma credit. The penalty imposed was deemed unjustified, given the circumstances. Consequently, the Tribunal set aside the Order of the Additional Collector and allowed the appeal, ruling in favor of the appellants.