2024 (5) TMI 857 - AT - Central Excise

Adjudication of show cause notice (SCN) after several year - Non/short payment of central excise duty - clearance of resin - exemption under N/N. 03/2005 dated 24.02.2005 or not - HELD THAT - The product of the appellant was exempted from the payment of central excise duty vide Notification No. 03/2005 dated 24.02.2005 up to 28.02.2006 where after the subsequent Notification No. 07/2006 dated 01.03.2006 had withdrawn the said notification. The later notification was challenged by others involved in manufacture of the impugned resins before the Hon ble High Court of Uttarakhand. The Division Bench of Hon ble Uttarakhand High Court in Commissioner Central Excise Customs Versus M/s Dujodwala Resins Terpenes Ltd. another, Anil Kumar Sud, Pooran Chandra Dalakoti, M/s Sud Pines Pvt. Ltd., Rakhsh Pal Shastri 2019 (7) TMI 1692 - UTTARAKHAND HIGH COURT allowed the special appeals filed by the department holding that central excise duty is payable on extraction of raw pine resin. These particular facts makes it abundantly clear that initially in the Year 2006 as per appellant s own notification, the payment of excise duty on clearance of resins was exempted. It remained exempted till 28.02.2006. No doubt subsequent to 10.07.2019, appellant is liable to pay the excise duty on clearance of resins but for the period prior the said date (the date of order of judgment by the Division Bench of Hon ble Uttarakhand High Court). It is very much apparent on record that except for the period from 18.09.2006 to 09.11.2006, the order confirming demand was in existence, however, the order got sub juticed w.e.f. November 2006 itself and got finally decided only on 10.07.2019 - The amount of duty as was collected by the appellants during the impugned period, apparently and admittedly stand released to its buyers. Thus, present becomes a case where no excise duty was collected from the buyers, question of discharging any liability towards excise becomes redundant. It is observed that even department could not proceed upon the show cause notices due to the ongoing litigation with respect to the impugned issue resulting into a late decision with respect to these show cause notices. The show cause notices as old as of the Year 2007, 2008, 2013 and 2014 got decided by the impugned order dated 21.09.2020. As per the statutory mandate, the central excise officer has to determine the amount of duty within 6 months of issuing a show cause notice in terms of Section 11A(11) of Central Excise Act. The adjudication in the present case, apparently is beyond several years. The show cause notices are not sustainable on this ground itself. The order under challenge is hereby set aside - Appeal allowed.

Issues:
- Appellant's failure to pay central excise duty on resin clearance
- Alleged evasion of central excise duty by retaining collected amount
- Dispute over duty liability due to legal challenges and subsequent releases of Fixed Deposit Receipts (FDRs)
- Appellant's contention of no intention to evade duty and regular discharge of duty liability
- Department's argument supporting the order under challenge

Analysis:

Issue 1: Appellant's failure to pay central excise duty on resin clearance
The appellant, engaged in resin manufacturing, faced allegations of not paying central excise duty on resin clearance, despite collecting the duty amount from customers in the form of Fixed Deposit Receipts (FDRs). The department claimed the duty evasion based on the retention of collected amounts, leading to the issuance of show cause notices and subsequent demand orders.

Issue 2: Alleged evasion of central excise duty by retaining collected amount
The department contended that the appellant's retention of excise duty collected from customers constituted evasion, resulting in proposed recovery of duty with interest and penalties. The Order-in-Original confirmed these demands, prompting the appellant to appeal before the Tribunal, challenging the sustainability of the demand.

Issue 3: Dispute over duty liability due to legal challenges and subsequent releases of FDRs
Legal complexities arose due to ongoing litigations regarding excise duty liability on resin clearance. The appellant cited various legal proceedings, including stays and judgments, to support their claim that duty collection was either stayed, released, or deemed arbitrary and illegal during specific periods. This legal backdrop formed a crucial aspect of the dispute.

Issue 4: Appellant's contention of no intention to evade duty and regular discharge of duty liability
The appellant argued that post-legal clarity on duty liability, they consistently discharged duty obligations. They maintained that for the disputed periods, either the demand was unsustainable due to legal stays or the duty amount was released post the legal decisions, indicating no intentional evasion on their part.

Issue 5: Department's argument supporting the order under challenge
The Departmental Representative defended the order, emphasizing the appellant's acknowledgment of duty liability in legal proceedings. They highlighted the statutory nature of excise duty payment and relied on specific findings to counter the appellant's claims of unsustainable demands. The department sought dismissal of the appeals based on these grounds.

Conclusion:
After considering the arguments, legal precedents, and factual circumstances, the Tribunal set aside the order under challenge, allowing the appeals. The decision was based on various grounds, including the legal complexities, delayed adjudication, and the absence of duty collection from buyers during disputed periods. The judgment reflected a detailed analysis of the legal and factual aspects, leading to the favorable outcome for the appellant.

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