2023 (1) TMI 1103 - AT - Central Excise

Levy of Central Excise Duty - Compounded levy scheme - breach of rule 8(3A) of Central Excise Rules, 2002 - HELD THAT - The provisions of rule 8 of Central Excise Rules, 2002, as prevalent in September and October 2008, had been breached and that the appellant herein upon being aware of the breach had not made good the deficiency immediately but awaited the report of audit in 2009. On the surface, it would appear that the discharge of duty liability in November 2009 did not suffice to restore the privilege of clearance of goods by debit of CENVAT credit account as the appellant continued to be in breach for the period till then. It is not recorded anywhere that the debit had ceased at any stage before surrender of the registration certificate in December 2010. We are inclined to take note of the developments between the takeover of the undertaking in November 2008 leading to subsequent closure including addition in the account current with no record of the same having been refunded to appellant thereafter. It would also appear that the plea of the appellant on incorrectness of demand under section 11A of Central Excise Act, 1944 beyond the normal period as well as the drawing of attention of central excise authorities to the deficiency in the returns had been ignored as is evident from the finding of the adjudicating authority that the memorandum of understanding (MoU) between the erstwhile management and the appellant, which was relevant, had not been furnished. To remedy these deficiencies, it would be necessary for the adjudicating authority to take stock of these facts and circumstances noted supra, to enable which it would be appropriate to set aside the impugned order and remand the matter back to the adjudicating authority. Appeal disposed off.

Summary

Issues: Alleged breach of rule 8 of Central Excise Rules, 2002 leading to duty liability, penalty imposition under section 11AC of Central Excise Act, 1944, and fine under section 34 of Central Excise Act, 1944.

The judgment revolves around an appeal by M/s Sri Dudeshwarnath Steel Pvt Ltd against an order-in-original for duty liability and penalties. The issue concerns the alleged breach of rule 8 of Central Excise Rules, 2002, leading to the imposition of a significant penalty. The appellant, under the 'compounded levy scheme,' failed to discharge central excise duties promptly, resulting in proceedings against them. The appellant argued that the demands were unsustainable, citing various court decisions favoring their position. They contended that the deposit made in the 'account current' should have nullified the breach. Additionally, they claimed that the extended period of limitation was unjustified as they promptly rectified discrepancies and were not responsible for the default.

The opposing view presented by the Learned Authorised Representative emphasized the clarity of rule 8(3A) and disputed the appellant's claims of ignorance regarding the previous owners' actions. It was argued that duty liability remains until the 'account current' is debited, and the balance is insufficient as payment. The appellant's plea of being unaware of the previous fraud was deemed unacceptable due to their acquisition of a 'going concern.'

The judgment analyzed the breach of rule 8 in 2008, noting the appellant's delay in rectifying deficiencies despite being aware of the breach. The discharge of duty liability in 2009 was deemed insufficient to restore clearance privileges. The court acknowledged the developments post-takeover and the inadequacies in addressing the appellant's concerns, suggesting a remand to the adjudicating authority for a thorough review. The appellant was directed to provide all relevant records for a proper determination of liability and damages.

In conclusion, the appeal was disposed of, emphasizing the need for a reassessment based on the highlighted deficiencies and circumstances. The responsibility was placed on the appellant to furnish necessary records for a lawful and just determination by the adjudicating authority.