2001 (1) TMI 402 - AT - Central Excise

Summary

Issues Involved:
1. Appeal against Order-in-Appeal confirming demand of Modvat credit.
2. Condonation of delay in filing declaration for Modvat credit.
3. Eligibility for Modvat credit on inputs.
4. Violation of Principle of Natural Justice in passing Adjudication Order.
5. Observance of principles of natural justice in adjudication process.

Analysis:
1. The appeal was filed against the Order-in-Appeal confirming the demand of Modvat credit. The Appellants initially availed full exemption of duty payment up to a certain limit and later claimed Modvat credit by filing a declaration. However, the declaration was filed late, and the Modvat credit was disallowed by the Asstt. Commissioner, who imposed a penalty citing various grounds, including the timing of credit taken and the exemption availed under Notification No. 1/93. The Commissioner (Appeals) upheld this decision, leading to the appeal.

2. The Appellants sought condonation of the delay in filing the declaration under Rule 57G(5). They argued that the inputs were in stock when they started removing goods on payment of duty, making them eligible for Modvat credit on those inputs. The delay in filing the declaration was attributed to the late receipt of the rejection letter from the Asstt. Commissioner. The Adjudication Order was passed without considering their reply or providing a hearing, raising concerns about due process.

3. The issue of eligibility for Modvat credit on inputs was a key point of contention. The Appellants claimed that they were entitled to the credit as the inputs were in stock when they commenced duty payments. This argument was central to their appeal against the disallowance of Modvat credit by the authorities.

4. The Respondent argued that the Adjudication Order was passed after fixing personal hearings that the Appellants did not attend, indicating no violation of the Principle of Natural Justice. However, the appellate authority found discrepancies in the process, noting that the Adjudication Order was issued without proper consideration of the Appellants' submissions and without adhering to the principles of natural justice.

5. The appellate tribunal, in its decision, highlighted the procedural irregularities in the adjudication process, emphasizing the importance of observing natural justice principles. Citing a previous case, the tribunal noted that the procedure followed in this case lacked adherence to natural justice principles. Consequently, the impugned Order was set aside, and the appeal was allowed by way of remand, directing the Adjudicating Authority to reconsider the matter after affording the Appellants a fair opportunity to present their case and be heard, ensuring due process in the adjudication process.