2000 (6) TMI 669 - AT - Central Excise

Summary

Issues:
Waiver of deposit of duty and penalty imposed on the assessee and its manager under Section 11AC of the Act and Rule 209A.

Analysis:
The case involved an application for the waiver of a duty deposit and penalties totaling Rs. 39.14 lacs demanded from a fertilizer manufacturer and a penalty of Rs. 50,000 on its manager. The manufacturer produced exempted fertilizers using ammonia, part of which was purchased from external sources. The Commissioner held that a portion of the sale price of the fertilizer manufactured from the externally procured ammonia should have been paid as duty. The advocate for the applicants contended that the amount under Rule 57CC was not duty, and recovery using Section 11A or Rule 57-I was not applicable. Additionally, it was argued that the notice was time-barred as it was issued beyond the six-month limit, alleging suppression of facts regarding the ammonia's usage. The flow chart submitted indicated the ammonia's use for manufacturing nitric acid, supporting the contention that the department should have been aware of the facts.

The departmental representative supported the impugned order's reasoning, while the flow chart presented during the proceedings illustrated the various uses of the nitric acid produced from the ammonia, including manufacturing ammonium nitrate phosphate. The Tribunal found it challenging to accept the contention in the notice that the usage of ammonia for nitric acid production was undisclosed, as the flow chart explicitly showed the process. Moreover, the conversion of ammonia into ammonium nitrate phosphate required prior conversion into nitric acid, indicating the department's likely awareness of the facts. Consequently, the Tribunal concluded that the notice was likely time-barred, and thus waived the deposit of duty and penalties imposed on the assessee and its manager, staying their recovery.