2003 (7) TMI 174 - AT - Central Excise

Tribunal Upholds Order on 57E Certificate Dispute, Emphasizes Procedural Fairness

The Tribunal upheld the lower appellate authority's decision in a case where the Revenue challenged an Order-in-Appeal directing the settlement of a 57E ... Adjustment in credit Issues:Challenge to Order-in-Appeal directing settlement of 57E certificate; Payment of duty for removals to sister concern; Withdrawal of 57E certificate; Amendment to Rule 57E; Allegations of clandestine removal and suppression of fact.Analysis:The case involved a challenge by the Revenue against an Order-in-Appeal directing the settlement of a 57E certificate. The assessees, a manufacturing company, had cleared intermediate products to their sister concern without paying duty, believing it was not required. However, they paid the duty before a show cause notice was issued. The Range Officer then issued a certificate of payment of duty under Rule 57E, which was later withdrawn without following natural justice principles. The Revenue contended that an amendment to Rule 57E, effective from 1-3-97, applied retrospectively, but the Tribunal disagreed, noting that the amendment explicitly had immediate effect. The Revenue also alleged suppression of fact and clandestine removal, which the Tribunal found unsubstantiated as the department was aware of the operations. The Tribunal upheld the lower appellate authority's decision, emphasizing that duty was paid before the show cause notice, and the certificate was issued hastily without proper verification. The Tribunal dismissed the Revenue's appeal, concluding that the lower authority's order was well-reasoned and valid.This judgment highlights the importance of following due process in issuing certificates and considering the timing of duty payments in relation to show cause notices. It clarifies that amendments with immediate effect do not have retrospective application and emphasizes that allegations of suppression of fact must be substantiated. The case underscores the significance of procedural fairness and adherence to legal requirements in tax matters, ensuring that decisions are based on sound reasoning and factual accuracy.