M/S.Madura Coats Private LTD. vs. The Commissioner Of Central

Facts

M/s. Madura Coats Private Limited, a manufacturer of cotton yarn and fabrics, used yarn captively for manufacturing grey cotton fabrics. The petitioner discharged duty liability on yarn consumed in exempted grey fabrics based on Rule 9 read with Rule 49 of the erstwhile Central Excise Rules, 1944, at the time of removal of fabrics. Show cause notices were issued for recovery of excise duty on cotton yarn removed captively for manufacturing grey cotton fabrics during January 2000 to December 2000, totaling Rs. 4,06,71,198, and a penalty of Rs. 1,00,00,000 was imposed. The petitioner had previously appealed to the Tribunal, which remanded the matter to the Commissioner for denovo consideration, directing finalization of provisional assessment. Subsequently, the Assistant Commissioner finalized the provisional assessment and passed refund orders, which were not challenged by the department. The impugned order, dated 27.03.2017, was passed by the Commissioner.

Held

The Court held that the impugned order in original No.17/COMMR/CE/2017 dated 27.03.2017 was not sustainable. The Court found that the adjudicating authority had not discussed or considered the report of the Deputy Commissioner from 2001, which had clarified the difficulty in quantifying duty on yarn used for grey fabrics and noted no short payment of duty. Furthermore, the Court noted that the subsequent assessment orders finalized by the jurisdictional Assistant Commissioner and the refund orders passed thereafter were not challenged by the department. The Court observed that the impugned order was a non-speaking order without sufficient details and lacked proper discussion of contentions and materials. Therefore, the Court set aside the impugned order and remitted the matter back to the Commissioner for a fresh consideration from the stage of the show cause notices, directing the Commissioner to pass an appropriate order after providing an opportunity to the petitioner to present their objections, within three months.

Key Issues

1. Whether the impugned order dated 27.03.2017, passed by the Commissioner of Central Excise, is a speaking order that considers the petitioner's contentions and relevant reports, particularly the Deputy Commissioner's letter dated Nil/01/2001 and the subsequent finalized assessment orders and refund orders? Petitioner's arguments: The petitioner contended that the impugned order failed to consider the Deputy Commissioner's report from 2001, which clarified the procedure for quantifying demands and noted no short payment of duty. They also argued that the subsequent finalized assessment orders and refund orders, which were not challenged by the department, established the correct quantification of duty. The petitioner questioned the wording in the impugned order regarding 'duty legally required to be paid' versus 'duty legally paid'. Revenue's arguments: The revenue argued that the finality attained in respect of refund orders based on provisional assessment finalization was of no help to the assessee, as the impugned order dealt with the demand for non-payment of duty on removal for captive consumption at the time of removal.