2008 (5) TMI 577 - AT - Central Excise

Tribunal Upholds Natural Justice, Cenvat Credit for Duty Payment

The Tribunal held that withdrawing the deferred payment facility without notice violated natural justice principles. The corrigendum enhancing the penalty ... Payment of duty - Fortnightly payment facility, withdrawal of Issues involved: Appeal against Order-in-Appeal regarding withdrawal of deferred payment facility, duty payment default, penalty imposition, corrigendum enhancement, violation of natural justice principles.Withdrawal of deferred payment facility without notice:The appellant defaulted in duty payment for certain months, leading to withdrawal of deferred payment facility without prior notice. The appellant contended that the withdrawal letter was received late and without opportunity to explain, violating natural justice principles. The Commissioner's failure to examine appellant's contentions and the arbitrary penalty enhancement through a corrigendum were highlighted. Cenvat credit utilization was also challenged, citing violation of Central Excise Act provisions and potential loss for small-scale units.Legal precedents and arguments:The appellant cited case laws emphasizing the need for following natural justice principles before withdrawing deferred payment facilities. The Departmental Representative supported the impugned orders.Judgment:The Tribunal found the withdrawal of deferred payment facility without a show cause notice to be a violation of natural justice principles. Citing a legal precedent, it emphasized the importance of affording a hearing before forfeiting such facilities. The corrigendum enhancing the penalty without reasoning was deemed improper, as it cannot substantially alter the original order. The Tribunal noted the duty payment through Cenvat credit as valid under the Central Excise Act. Consequently, the impugned order upholding the original decision was set aside, and the appeals were allowed with consequential relief.