2001 (5) TMI 225 - Commission - Central Excise

Issues Involved:
1. Extension of duty demand period beyond the show cause notice.
2. Abatement of duty amount from the cum-duty price.
3. Abatement on account of 3.8% production loss (culls).
4. Abatement on account of eligible Modvat on inputs.
5. Immunity from prosecution, penalty, fine, and interest.

Issue-Wise Detailed Analysis:

1. Extension of Duty Demand Period Beyond the Show Cause Notice:
The Commission examined whether it could extend the duty demand period beyond the period mentioned in the show cause notice (13-3-1999 to 23-7-1999) as proposed by the Commissioner (Investigation). The Applicant's Advocate argued that the Commission's jurisdiction is confined to the period specified in the show cause notice, citing Section 31C and Section 32E(1) of the Central Excise Act. They also referenced the Supreme Court's decision in CIT v. Paharpur Cooling Towers Pvt. Ltd., which held that the Commission cannot extend beyond the assessment year for which the application is filed. The Commission agreed, ruling that it cannot go beyond the period and quantum of duty demanded in the show cause notice, rejecting the Commissioner (Investigation)'s recommendation as legally untenable.

2. Abatement of Duty Amount from Cum-Duty Price:
The Applicant requested abatement of the duty amount from the cum-duty price under Section 4(4)(d)(ii) of the Central Excise Act. The Commission noted that neither the DG (AE) nor the Revenue provided evidence that the Applicant collected any duty on the disputed product for the period in question. The Commissioner (Investigation) supported the view that the price in the invoice could be taken as cum-duty-price. The Commission relied on the decision of the CEGAT in Srichakra Tyres Ltd., which supported abatement from cum-duty price. Consequently, the Commission ruled that the Applicant is entitled to this abatement.

3. Abatement on Account of 3.8% Production Loss (Culls):
The Applicant claimed abatement for 3.8% production loss as culls, which were never sold but destroyed with the department's permission. The DGAE confirmed that a production/process loss of 3.8% had already been allowed based on input-output norms. The Commission found no justification for further abatement on this count, as the production/process loss had already been considered.

4. Abatement on Account of Eligible Modvat on Inputs:
The issue arose because the Applicant did not maintain appropriate Central Excise records due to claiming exemption under Notification No. 60/91-C.E. The Commissioner (Investigation) tried to determine the approximate quantum of Modvat credit based on input consumption and found some correlation for certain inputs. The DGAE agreed that the Modvat claim of Rs. 14,07,470/- was arithmetically correct. The Commission, referencing the Bombay High Court decision in Kirloskar Brothers Ltd., ruled that the claim for Modvat abatement is tenable and allowed it.

5. Immunity from Prosecution, Penalty, Fine, and Interest:
The Applicant sought immunity from prosecution, penalty, fine, and interest under the Central Excise Act. The Commission acknowledged the Applicant's full and true disclosure and cooperation but noted the fraudulent availment of exemption under Notification No. 60/91-C.E. The Commission decided to impose a simple interest of 10% per annum on the wrongly availed exemption from the date of wrong availment until the duty payment date. The Commission settled the case by accepting a total duty of Rs. 1,61,21,635/- and granted immunity from prosecution and penal liability, subject to the condition that the settlement would be void if obtained by fraud or misrepresentation.

Conclusion:
The Commission ordered the settlement of the case with the total duty payable of Rs. 1,61,21,635/- and additional interest at 10% per annum for the period of wrong availment. The Applicant was granted immunity from prosecution and penalties, provided the settlement was not obtained by fraud or misrepresentation.

← Previous Next →