2001 (9) TMI 483 - AT - Central Excise

Appellate Court Rules Against Improper Duty Recovery, Emphasizes Legal Procedures

The appellate court held that Rule 5 of HRSMACD Rules could not be invoked as the appellants' APC had decreased, not increased or remained the same. The ... Iron and Steel products - Recovery of duty short-paid - Demand, Show cause notice, Recovery, Adjudication Issues Involved:1. Whether Rule 5 of HRSMACD Rules could be invoked for determining the APC of the units.2. Whether recovery of short paid duty could be recovered without complying with Section 11A of the Central Excise Act.Analysis:Issue 1: Rule 5 of HRSMACD Rules ApplicationThe appellants operated hot steel re-rolling mills and paid duty based on APC of their units. The Commissioner determined APC using Rule 5 of HRSMACD Rules, leading to detention orders for short payment. The Tribunal remanded the case for fresh decision. The APC was re-determined for the appellants, but it was challenged. The Larger Bench decision stated Rule 5 applies when APC remains the same or increases due to machinery change, not when it decreases. Evidence showed reduction in APC for both appellants. The Commissioner's rejection lacked basis and ignored expert reports. Hence, Rule 5 couldn't be applied, and APC under Rule 3 was correct.Issue 2: Recovery of Short Paid DutyThe recovery of short paid duty without following Section 11A was challenged. The duty liability was quantified based on Rule 5, but recovery without Section 11A compliance was disputed. Rule 96ZP outlines duty payment procedure, while Section 11 governs recovery. Section 11A mandates show cause notice for duty recovery. The Apex Court emphasized this procedure in previous judgments. The Commissioner's orders for detention/attachment without Section 11A compliance were deemed improper. Show cause notices were issued but not adjudicated, contrary to legal requirements. The recovery orders lacked adherence to Section 11A and legal precedents. Therefore, the recovery orders were set aside, and appellants' appeals were accepted.In conclusion, the Commissioner's orders in all five appeals were overturned, and the appellants' appeals were successful, emphasizing the importance of adhering to legal procedures, specifically Section 11A, in duty recovery matters.