2013 (10) TMI 172 - HC - Central Excise

Differential Demand Duty Imposition of Penalty Abatement Claims - Whether the Tribunal was justified in confirming the order of Differential Demand of duty and imposition of penalty when the Abatement Claims for the relevant period are lying as such for decision Held that - The matter relating to abatement claim was remanded by the Tribunal to the Commissioner Adjudication there was no condition under Rule 96ZP(2) of the Central Excise Rules, which provided that deposit of duty was the condition precedent for the claim of the abatement - levy of the penalty as also the demand of differential duty for the period during which the appellant had been allowed the claim of abatement was not justified - levy of the penalty as also the demand of differential duty for the period during which the appellant had been allowed the claim of abatement was not justified - The order of the Tribunal was set aside - The appeal succeeds and was allowed.

Issues:
1. Appeal under Section 35G of the Central Excise Act, 1944 against the order of the Customs, Excise & Service Tax Appellate Tribunal, New Delhi.
2. Justification of confirming the order of Differential Demand of duty and imposition of penalty while Abatement Claims are pending.
3. Applicability of abatement of duty under sub-section (3) of Section 3A of the Act read with Rule 96ZP of the Central Excise Act, 1994.
4. Interpretation of Rule 96ZP(2) of the Central Excise Rules regarding the deposit of duty as a condition precedent for claiming abatement.

Analysis:

1. The appeal was filed under Section 35G of the Central Excise Act, 1944 against the order of the Customs, Excise & Service Tax Appellate Tribunal, New Delhi. The main question of law admitted for consideration was whether the Tribunal was justified in confirming the order of Differential Demand of duty and imposition of penalty while the Abatement Claims for the relevant period were pending.

2. The appellant, a manufacturer of Hot re-rolled products, had claimed abatement of duty under sub-section (3) of Section 3A of the Act read with Rule 96ZP of the Central Excise Act, 1994 for the period from April, 1998 to March, 1999. The factory had remained closed for various periods during this time, leading to a dispute regarding the duty amount payable. The appellant had filed claims for abatement before the competent authority, but a show cause notice was issued demanding duty for the period in question.

3. The matter of abatement claim was remanded by the Tribunal to the Commissioner Adjudication. It was established that there was no condition under Rule 96ZP(2) of the Central Excise Rules mandating the deposit of duty as a prerequisite for claiming abatement. A previous judgment had clarified this position, stating that duty deposit was not a condition precedent for abatement claims.

4. The appellant appealed to the Tribunal against the demand for the payment of a differential amount of duty. The Tribunal, however, held the appellant liable to discharge the duty liability and imposed a penalty, albeit reducing it to Rs. 2 lakhs. Upon hearing the counsels for both parties, the High Court overturned the Tribunal's decision. Citing the previous judgment, the Court found that the penalty and demand for the differential duty during the period of allowed abatement were unjustified. Consequently, the Court set aside the Tribunal's order, allowing the appeal in favor of the appellant.

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