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2014 (3) TMI 1033 - AT - Central Excise


Issues: Alleged erroneous refund under Notification No. 56/2002-C.E., duty demand on packing materials, imposition of penalties.

Alleged Erroneous Refund under Notification No. 56/2002-C.E.:
The case involved M/s. Vinayak Industries, manufacturers of tin containers availing exemption under Notification No. 56/2002-C.E. They were accused of deferring the availment of cenvat credit, resulting in higher duty payment through PLA and claiming a higher refund. The show cause notice sought recovery of the "wrongly taken refund." The Commissioner confirmed a demand against M/s. Vinayak Industries for erroneous refund and short payment of duty. However, the appellant argued that the situation was revenue-neutral, with a strong prima facie case in their favor. The Tribunal found merit in the appellant's plea, considering the revenue-neutral nature of the case.

Duty Demand on Packing Materials:
Additionally, a duty demand was imposed on M/s. Vinayak Industries for short payment of duty on additional consideration of packing materials received from M/s. Vishal Industries. The appellant contended that even if the duty was paid, it would have been through PLA and would be available as a refund. They argued that the cost of packing charges should not be included in the assessable value of the goods. The Tribunal found a prima facie case in favor of M/s. Vinayak Industries on this issue as well.

Imposition of Penalties:
Penalties were imposed on both M/s. Vinayak Industries and M/s. Vishal Industries. The appellant argued against the imposition of penalties, stating they had a strong prima facie case. The Tribunal observed that M/s. Vishal Industries had not committed any offenses warranting the penalty imposed under Rule 26(1) of the Central Excise Rules. As a result, the Tribunal found that the imposition of penalties was not justified. The requirement of pre-deposit of duty demand, interest, and penalties was waived for the hearing of their appeals, and recovery was stayed until the disposal of the appeals.

In conclusion, the Tribunal allowed the stay applications, considering the revenue-neutral nature of the alleged erroneous refund, the assessable value of the goods regarding the duty demand on packing materials, and the lack of justification for imposing penalties on the parties involved.

 

 

 

 

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