1995 (1) TMI 210 - AT - Central Excise

Tribunal upholds penalty, sets aside duty demand in proforma credit misuse case.

FEDDERS LLOYD CORPN. LTD. Versus COLLECTOR OF CENTRAL EXCISE, NEW DELHI

FEDDERS LLOYD CORPN. LTD. Versus COLLECTOR OF CENTRAL EXCISE, NEW DELHI - 1995 (78) E.L.T. 207 (Tribunal) Issues:1. Misutilization of proforma credit by clearing air conditioners with excess credit earned on component parts of refrigerators.2. Reopening of the issue by the department based on a fresh show cause notice.3. Applicability of the corrigendum to the show cause notice.4. Barred by limitation.5. Recomputation of credit and Personal Ledger Account.6. Adjustment of credit for duty payment on finished products.Analysis:1. The appeal was filed against the order imposing duty demand due to misutilization of proforma credit by clearing air conditioners with excess credit earned on component parts of refrigerators. The Asstt. Collector found the appellants had misutilized the credit, leading to the duty demand. The Collector (Appeals) upheld the order partially and reduced the penalty.2. The appellants argued that both air conditioners and refrigerators were classifiable under the same Tariff Item, maintaining a combined RG-23 account for duty payment on both products. They contended that the department's reopening of the issue through a fresh show cause notice was unjustified and time-barred, as their practice was known and allowed previously.3. The appellants challenged the corrigendum to the show cause notice, claiming it was not a fresh notice and was time-barred. They argued that the entire exercise was academic, with no revenue effect, as they had paid duty on refrigerators from their Personal Ledger Account.4. The appellants submitted further details post an interim order, showing duty payments and credit utilization. They contended that the excess credit use had no revenue impact, as they had paid more duty from their Personal Ledger Account than the credit earned on component parts.5. During the hearing, the appellants relied on Tribunal decisions supporting their case, emphasizing the adjustment of credit between RG 23A and Personal Ledger Account to regularize duty payment on different products under the same Tariff Heading.6. The Tribunal found that while the Collector (Appeals) was legally correct in the findings, the adjustment of credit sought by the appellants was permissible. The appellants did not gain any undue advantage, and there was no loss of duty. The impugned order-in-appeal was set aside concerning duty demand, and the penalty was upheld due to irregularity in credit utilization.This detailed analysis covers the issues raised in the legal judgment comprehensively, addressing the misutilization of credit, reopening of the issue, applicability of the corrigendum, recomputation of credit, and the adjustment of credit for duty payment on finished products.