2018 (5) TMI 388 - AT - Central Excise

Refund of excess duty paid - time limitation - power of Commissioner (Appeals) to remand the case for the purpose of quantification of duty - Held that - Though we agree with the proposition of law that Commissioner (Appeals) has no powers to remand the matter, we find that the remand was only for a limited purpose - In any case, the Tribunal has powers to remand and therefore, we direct the original authority to re-quantify the duty as confirmed by the Commissioner (Appeals) for the normal period - Appeal disposed off.

Summary

Issues:
1. Refund claim for duty paid in excess.
2. Challenge to the vires of Rule 8 of Central Excise Valuation Rules.
3. Demand of duty for short payment on clearances made to related persons.
4. Commissioner (Appeals) directing the original authority to re-quantify the demand for the normal period.

Analysis:
1. The case involved the respondents, manufacturers of cotton yarn and knitted cotton fabrics, who filed refund claims for duty paid in excess on clearances made to related persons. The Hon'ble High Court granted interim injunction, allowing the respondents to contest the matter before the concerned authorities based on Circular No.692/8/2003-CX and a decision of a Larger Bench. The issue arose when short payment of duty to the tune of ?19,97,222/- was noticed on clearances made to their sister concern, leading to a show cause notice for demanding differential duty, interest, and penalties. The original authority confirmed the duty demand, interest, and penalties, which was partially modified by the Commissioner (Appeals) by setting aside the penalty under Section 11AC for the extended period. The department appealed to the Tribunal against this order.

2. The appellant argued that the Commissioner (Appeals) erred in directing the adjudicating authority to modify the demand by considering the time-barred period and that the Commissioner had no power to remand the matter. The appellant also contended that there were no specific allegations of suppression of facts to evade duty. On the other hand, the respondent's counsel argued that there was no such allegation in the show cause notice and that the appellant had a bona fide belief in challenging the vires of Rule 8, pending before the High Court. The Commissioner (Appeals) was right in setting aside the demand beyond the normal period and directing the lower authority to quantify the demand for that period.

3. The main grievance raised was regarding the Commissioner (Appeals) directing the original authority to re-quantify the demand for the normal period. The Tribunal noted that while the Commissioner had discussed the lack of ingredients to invoke the extended period, the remand was only for quantification purposes. Although the Commissioner (Appeals) ordinarily lacks the power to remand, the Tribunal clarified that it had such authority and directed the original authority to re-quantify the duty demand for the normal period as confirmed by the Commissioner (Appeals). Consequently, the appeal filed by the department was disposed of accordingly.