1998 (2) TMI 375 - AT - Central Excise

Summary

Issues:
1. Wrong set-off availed under Section 11A of the Central Excise Act, 1944.
2. Utilization of credit in the set-off register for export contrary to Notification 355/86.
3. Transfer of non-utilized set-off/credit between factories.
4. Violation of principles of natural justice in the adjudication process.

Analysis:

Issue 1: Wrong set-off availed under Section 11A
The appellant sought waiver of pre-deposit and stay of recovery of demanded amount due to alleged wrong set-off availed during 1994-95. The appellant contended that their set-off procedure, in place since 1986, involved utilizing duty paid on cut tobacco for manufacturing cigarettes. The revenue objected to the set-off utilization for exported cigarettes, claiming it violated Notification 355/86. The appellant argued that their procedure did not result in revenue loss and had been followed for a decade.

Issue 2: Utilization of credit in the set-off register for export
The appellant defended the utilization of set-off credit for exported cigarettes, emphasizing that any diversion of export-bound cigarettes to another factory did not lead to revenue loss. They highlighted ongoing procedures and previous approvals by local excise officers. The appellant also raised concerns regarding the adjudicating authority's failure to provide a further hearing post the High Court's pending decision on a related matter.

Issue 3: Transfer of non-utilized set-off/credit between factories
The appellant pointed out a pending matter in the High Court regarding the transfer of credit between factories, underscoring the need for a fair hearing and the opportunity to present relevant materials and case laws. They cited legal precedents supporting transfer of credit between manufacturer units.

Issue 4: Violation of principles of natural justice
The Tribunal acknowledged the appellant's argument that the adjudicating authority's failure to grant another hearing post the High Court's pending decision violated principles of natural justice. Consequently, the Tribunal set aside the impugned order and remanded the matter for a fresh adjudication ensuring adherence to natural justice principles.

In conclusion, the Tribunal found merit in the appellant's arguments regarding procedural compliance, revenue impact, and the right to a fair hearing. The decision to remand the matter for a fresh adjudication underscored the importance of upholding principles of natural justice in excise matters.