2000 (8) TMI 462 - AT - Central Excise

Issues:
1. Correctness of Order-in-Original No. 40/85 dated 19-12-1985
2. Duty demand confirmation under Rule 9(2) of the Rules read with Section 11A of the Act
3. Imposition of penalty invoking Rule 9(2) and 173Q of the Rules
4. Appeal and application for stay of operation of the impugned order
5. Compliance with the order of stay by depositing a sum of Rs. 65,000 and furnishing a bank guarantee
6. Miscellaneous application by the Department for an out of turn hearing or vacating the order of stay
7. Tribunal's disposal of the appeal by Final Order 2748/96-A dated 8-8-96
8. Restriction of duty liability to a period of six months prior to the show cause notice
9. Return of the amount deposited and bank guarantee furnished after the appeal was allowed
10. Misconception by the Department regarding the penalty outstanding
11. Direction for the Department to return the amount with interest and the expired bank guarantee

Analysis:
1. The appeal (E/117/86-A) was filed to challenge the correctness of Order-in-Original No. 40/85 dated 19-12-1985, which confirmed a duty demand of Rs. 1,29,530.98 under Rule 9(2) of the Rules along with a penalty of Rs. 50,000 on the assessee. An application for stay of the order was filed and granted, requiring the assessee to deposit Rs. 65,000 and furnish a bank guarantee of equal amount. The Department later sought an out-of-turn hearing or to vacate the stay order, which was rejected, ensuring the interest of the department was protected as per Section 35F of the Act.

2. The Tribunal disposed of the appeal by Final Order 2748/96-A, restricting the duty liability to a period of six months prior to the show cause notice. The appeal was allowed with consequential relief, leading to the vacation of the impugned order. Consequently, the amount deposited and the bank guarantee furnished should have been returned to the assessee, as they fell under the purview of Section 35F and could not be retained by the Department after the appeal was allowed.

3. Despite the lapse of more than four years, the authorities did not take steps to return the deposited amount and the bank guarantee. The Department mistakenly believed that a penalty of Rs. 50,000 was outstanding, which could be appropriated against the deposit. However, the final order clearly stated that the appeal was allowed with consequential relief, leading to the vacating of the impugned order entirely.

4. The Tribunal directed the Department to return the deposited amount of Rs. 65,000 with 12% interest per annum from the expiry of three months from the final order date. The expired bank guarantee should also be returned promptly since it was not being kept alive by the assessee. The application was disposed of accordingly, emphasizing the need for the Department to comply with the directive to return the deposited amount and the expired bank guarantee.

← Previous Next →