2005 (2) TMI 363 - AT - Central Excise

Summary

Issues involved: Interpretation of Rule 57H(7) of the Central Excise Rules regarding reversal of credit on goods when opting for exemption, time-barred demand, invocation of extended period of limitation.

Interpretation of Rule 57H(7) of the Central Excise Rules: The case involved the respondents manufacturing various castings and availing small scale exemption. Upon crossing the exemption limit, they paid duty and availed Modvat. The issue arose when they were required to reverse the credit on goods and inputs in stock upon opting for SSI exemption. The adjudicating authority confirmed a duty demand and imposed a penalty based on Rule 57H(7). However, the Commissioner (Appeals) set aside the demand as time-barred, citing that details from the balance sheet, being public, did not indicate suppression of facts to evade duty.

Time-barred demand: The Commissioner (Appeals) held the demand as time-barred, noting that information regarding excess stock emerged from the balance sheet, which is a public document. The appeal by the Revenue challenged this decision, arguing that the demand should not be considered time-barred based on the interpretation of the law.

Invocation of extended period of limitation: Referring to a precedent involving Maruti Udyog Ltd. v. CCE, New Delhi, the Tribunal highlighted the importance of declaring waste and scrap for availing credit. The Tribunal emphasized that without such declaration, the department cannot be assumed to have universal knowledge. In light of this decision, the Tribunal set aside the finding of the Commissioner (Appeals) and remanded the case for a fresh decision on merits, providing the assessees with a reasonable opportunity to present their defense.

The Tribunal allowed the appeal by remand, emphasizing the need for a fresh decision on merits by the Commissioner (Appeals) after providing the assessees with an opportunity to be heard.