2004 (7) TMI 450 - AT - Central Excise

Appellate Tribunal rules on Modvat credit & penalty under Central Excise Rules

The Appellate Tribunal CESTAT, Kolkata partially allowed the appeal in a case concerning the recovery of Modvat credit and penalty under the Central ... Show cause notice - Scope of - Interest Issues:Recovery of Modvat credit, chargeability of duty and interest, jurisdiction of authorities beyond show cause notice.Analysis:The appeal before the Appellate Tribunal CESTAT, Kolkata involved a dispute regarding the recovery of Modvat credit and the imposition of penalty under Rule 9(2) read with Rule 173Q of the Central Excise Rules, 1944. The appellant argued that the authorities had exceeded their jurisdiction by ordering the recovery of interest and duty without issuing a show cause notice specifically for these elements, relying on legal precedents such as DCW Ltd. v. Asstt. Collr. of Central Excise, Tuticorin and Reckitt & Colman of India Ltd. v. Collector of Central Excise. The respondent, on the other hand, supported the order of the Commissioner (Appeals).The Tribunal noted that the show cause notice in this case was limited to the recovery of Modvat credit and penalty, with no mention of excise duty, penalty, or interest. Despite this, the Deputy Commissioner and the Commissioner (Appeals) had ordered the recovery of interest under Section 11AA and 11AB of the Central Excise Act, 1944, respectively. The Tribunal emphasized that authorities cannot go beyond the scope of the show cause notice issued, citing legal precedents like Reckitt Colman of India Ltd. v. Collector of Central Excise and DCW Ltd. v. Asstt. Collr. of Central Excise, Tuticorin.Consequently, the Tribunal partially allowed the appeal, maintaining the penalty imposed by the Deputy Commissioner but setting aside the order for interest payment. The Tribunal clarified that since no notice was issued for the recovery of duty, no interest could be levied on the duty amount. This decision reaffirmed the principle that authorities must confine their actions to the scope of the show cause notice, as established by previous judicial rulings.