2017 (5) TMI 1193 - AT - Central Excise

MODVAT (deemed) credit - N/N. 7/2001-CE(NT), dt.01.03.2001 - deemed credit - denial of credit on the ground that since there was default on the part of the appellant in not depositing the duty in time and making incorrect entry in their RT-12 return about the payment of duty through TR-6 challan, therefore, the benefit of deemed credit cannot be extended to them - Held that - to examine the claim of the Appellant that they had informed the fact of non-payment of duty against few TR-6 challan vis- -vis the entries made in the RT-12 returns, the matter need to be remanded to adjudicating authority who would analyze in detail the same before arriving at the conclusion about the intention of the Appellant in not discharging the duty during the relevant period - appeal allowed by way of remand.

Summary

Issues:
- Dispute over duty payment under compounded levy scheme for certain months.
- Imposition of penalty and interest under Central Excise Acts & Rules.
- Denial of deemed credit under Notification No.7/2001-CE(NT).
- Dispute over penalty imposition on partnership firm and partner.
- Discrepancies in RT-12 returns and TR-6 challans.
- Remand for further analysis of evidences and intention of the appellant.

Analysis:
1. The appeals were filed against OIO No.21/MP/2005, passed by the Commissioner, C.Ex. & S.Tax, Surat-I. The Appellants, engaged in the manufacture of processed fabrics, were found to have short paid duty under compounded levy scheme and wrongly mentioned TR-6 challan numbers as if duty was paid. A Show Cause Notice was issued for recovery of duty amounting to ?1,35,65,287/- with penalties imposed. The main contention was the denial of deemed credit under Notification No.7/2001-CE(NT) and the imposition of penalties.

2. The Appellant admitted short payment during Jan. & Feb. 2001 but disputed penalty imposition, citing a Supreme Court judgment. They argued for deemed credit benefit under the notification, emphasizing correct entries in RT-12 returns. They claimed no intention to evade duty, as clearances were done against proper invoices.

3. The Appellant challenged the denial of deemed credit under the notification, stating that despite non-payment for some months, goods were cleared against invoices. They argued that penalties on the partnership firm and partner were incorrect, citing a Gujarat High Court judgment.

4. The Revenue representative supported the Commissioner's findings, alleging the Appellants made fraudulent statements about duty payment. They argued that the benefit of deemed credit was rightly denied, and penalties were justified based on evidence.

5. The Tribunal remanded the case for further analysis of RT-12 returns and forwarding letters to determine the Appellant's intention regarding duty payment. Both parties agreed that the forwarding letter contents were not analyzed during the initial adjudication. The matter was directed to be completed within three months.

6. The appeals were allowed by way of remand, focusing on the main issue of deemed credit eligibility. The Tribunal emphasized addressing all ancillary issues while deciding on the main issue. Cooperation from the Appellants was directed for the adjudication process.