1992 (11) TMI 188 - AT - Central Excise

Summary

Issues:
1. Dispute over the duty rate paid by the respondents.
2. Applicability of Modvat Scheme and its impact on duty liability.
3. Timing of show cause notice issuance and its adequacy.

Analysis:

Issue 1: Dispute over the duty rate paid by the respondents
The Department contested the duty rate paid by the respondents, claiming it should have been 15% instead of 6.25% as per relevant notifications. The Department sought to recover the short duty paid by the respondents. The impugned order was challenged on the grounds that the demand was not time-barred, and the respondents did not dispute their liability to pay duty at the higher rate.

Issue 2: Applicability of Modvat Scheme and its impact on duty liability
The respondents, through their counsel, acknowledged the factual position presented by the Department regarding the duty rate discrepancy. It was revealed that the respondents had opted out of the Modvat Scheme with effect from a specific date. The change in circumstances, i.e., opting out of the Modvat Scheme, was highlighted as a crucial factor that needed consideration for determining the duty liability of the respondents. The Tribunal emphasized the importance of considering subsequent changes in circumstances while deciding on duty liability and directed the matter to be reconsidered by the original authority in light of the respondents' opting out of the Modvat Scheme.

Issue 3: Timing of show cause notice issuance and its adequacy
The Tribunal observed a discrepancy in the timing of the show cause notice issuance in relation to the assessment of the RT 12 return. It was noted that the reasons for the demand of short levy were clearly outlined in the RT 12 assessment memoranda, which could be construed as a show cause notice. The Tribunal agreed that the endorsement on the RT 12 return served the purpose of a show cause notice, and there was no necessity for a separate notice. The matter was remanded to the original authority for a detailed examination of the respondents' entitlement to the lower duty rate based on their withdrawal from the Modvat Scheme.

In conclusion, the Tribunal allowed the appeal by remand, emphasizing the need to consider the respondents' change in circumstances and directing a reassessment of the duty liability in light of their withdrawal from the Modvat Scheme.