2009 (12) TMI 765 - AT - Central Excise

Summary

Issues:
1. Liability for differential excise duty and penalty.
2. Appropriation of refund against central excise duty.
3. Validity of show cause notice and procedural aspects.
4. Appeal against penalties imposed on company officers.

Analysis:

Issue 1: Liability for differential excise duty and penalty
The appellants, manufacturers of railway sleepers, were directed to pay differential excise duty of Rs. 14,34,437/- for the period from 12/93 to 1/95. Despite a refund claim for Rs. 11,74,086/- due to erroneous payment, the revenue appropriated the refund against the outstanding duty. The Order-in-Original confirmed the demand under Section 11A of the Central Excise Act, 1944. The CESTAT upheld the duty demand but recommended interest payment from 28-3-1996 to 25-6-1998. An amount was paid towards interest, and the case was taken up by the Hon'ble High Court of Karnataka for de novo adjudication.

Issue 2: Appropriation of refund against central excise duty
The Hon'ble High Court directed fresh notice issuance for central excise duty demand. The Adjudicating Authority confirmed the demand, upheld the appropriation of the refund, and imposed penalties on the managing director and manager. The learned Commissioner (Appeals) upheld the Orders-in-Original, leading to an appeal before the CESTAT. The CESTAT directed reconsideration by the Adjudicating Authority, emphasizing the need to consider all submissions and principles of natural justice.

Issue 3: Validity of show cause notice and procedural aspects
The show cause notice for appropriation and corrigendum were issued following the High Court's directions. The scope of the notice was enlarged, demanding duty from the appellant on the assessment of RT 12 Returns. The CESTAT found the enlargement of the notice and penalties unwarranted, remitting the matter back to the Adjudicating Authority for reconsideration.

Issue 4: Appeal against penalties imposed on company officers
Appeals by the officers of the company against the penalties were allowed by the CESTAT, as the activity related to finalization of provisional assessment did not warrant penalties under Rule 209A of the Central Excise Rules, 1944.

In conclusion, the CESTAT set aside the impugned orders, remitting the matter to the Adjudicating Authority for fresh consideration, and allowed the appeals against penalties imposed on company officers.