2000 (12) TMI 662 - AT - Central Excise

Summary

Issues:
1. Confirmation of duty demand under Rule 57-I and Section 11A
2. Imposition of personal penalty
3. Availing Modvat credit for Liquid Oxygen
4. Denial of using own manufactured Liquid Oxygen in Medicinal Oxygen
5. Grounds of limitation for duty demand
6. Ex parte proceedings due to factory shutdown

Confirmation of duty demand under Rule 57-I and Section 11A:
The authorities confirmed a duty demand of Rs. 22,48,471 under Rule 57-I and Section 11A. The appellants argued that they stored and used Liquid Oxygen from outside parties with permission, availing Modvat credit. The Department contended that clearing Liquid Oxygen without duty payment under Chapter X Procedure required repayment of Modvat credit. The Tribunal remanded the matter for fresh adjudication due to a violation of natural justice.

Imposition of personal penalty:
A personal penalty of Rs. 2.50 lakhs was imposed on the appellants. However, the focus of the appeal was primarily on the duty demand issue and the violation of natural justice due to ex parte proceedings. The Tribunal did not provide specific details or findings regarding the personal penalty in this judgment.

Availing Modvat credit for Liquid Oxygen:
The appellants used Liquid Oxygen from outside parties along with their own manufactured Liquid Oxygen in production. The Department argued that clearing Liquid Oxygen without duty payment necessitated repayment of Modvat credit. The Tribunal found a need for apportionment between Modvat inputs and own manufactured goods, indicating a requirement for proper allocation and accounting practices.

Denial of using own manufactured Liquid Oxygen in Medicinal Oxygen:
The appellants were denied the use of their own manufactured Liquid Oxygen in the production of Medicinal Oxygen cleared without duty payment. The issue raised the necessity for establishing a clear apportionment between Modvat inputs and self-manufactured goods for duty payment purposes.

Grounds of limitation for duty demand:
The duty demand related to the period from June 1986 to March 1990, with a show cause notice issued on 23-5-1991. The appellants argued that due to a factory shutdown during the relevant period, they faced difficulties in appearing before authorities. The Tribunal acknowledged the factory's lockout as a valid reason for non-appearance, leading to a violation of natural justice and a remand for fresh adjudication.

Ex parte proceedings due to factory shutdown:
The factory's shutdown led to the appellants' non-appearance before the authorities, resulting in ex parte proceedings. The Tribunal recognized the violation of natural justice in not granting another opportunity for the appellants to present their case. Consequently, the impugned Order was set aside, and the matter was remanded to the Commissioner for a fresh decision, emphasizing the importance of adhering to principles of natural justice in legal proceedings.