2000 (4) TMI 226 - AT - Central Excise

Summary

Issues:
Appeal against order-in-original for duty re-quantification and penalty imposition without quantifying duty amount.

Analysis:
The appeal before the Appellate Tribunal CEGAT, New Delhi stemmed from an order-in-original issued by the Collector of Central Excise, Bombay I, which directed re-quantification of duty and imposed penalties on the appellants. The appellants, manufacturers of excisable goods, were found to have irregularities in their Modvat claim during a surprise visit to their factory premises. The Collector's order disallowed Modvat credit on inputs and imposed penalties without quantifying the duty amount. The appellants contested the show cause notice but were unsuccessful, leading to the appeal before the Tribunal.

The main contention raised by the appellants' counsel was that the penalty imposition without quantifying the duty amount and the delegation of re-quantification to the Assistant Collector rendered the Collector's order invalid. Citing precedent, the counsel argued that the quantification of demand must be done by the adjudicating authority and cannot be delegated to a subordinate officer. The Tribunal noted that penalties should only be imposed after determining the duty amount, which should have been done by the Collector himself, not delegated. Relying on the legal principle established in Pure Drinks Ltd., New Delhi case, the Tribunal found the Collector's order legally unsustainable and directed the matter to be decided afresh by the Collector in accordance with the law.

In its analysis, the Tribunal highlighted that the impugned order was deficient in legal grounds due to the premature imposition of penalties and improper delegation of re-quantification. Consequently, the Tribunal set aside the Collector's order, remanding the matter for a fresh decision by the Collector after hearing both parties. The appeal of the appellants was allowed by way of remand, emphasizing the need for a lawful determination of duty amount before penalty imposition.