2002 (5) TMI 488 - AT - Central Excise

Summary

Issues:
- Duty demand confirmation against the firm appellant and penalties imposed on partners
- Dispute over clearance of goods in DTA without permission and central excise registration
- Time-barring of demand and recalculating duty liability
- Invocation of extended period of limitation due to suppression of material facts
- Excessive penalty imposition and plea for reduction

Analysis:
1. The judgment concerns appeals against an order confirming duty demand of Rs. 15,69,046 against the firm appellant and penalties on partners for making DTA clearances without central excise registration and duty payment. The firm, registered as a 100% export-oriented unit, was required to export 100% of production under Exim Policy, manufacturing dehydrated onions exempt from excise duty. Despite depositing evaded duty, a show cause notice led to the duty confirmation and penalties by the Commissioner.

2. The dispute revolves around the clearance of goods in DTA without seeking permission, violating conditions of operating as a 100% EOU. The appellants argued that permission was superfluous, contending no violation due to the goods not being restricted. However, the Tribunal rejected this, stating the registration obligated compliance with terms, including not clearing goods in DTA without permission, central excise registration, and duty payment, as per Exim Policy provisions.

3. Regarding the time-barring of demand, the Tribunal noted the demand period beyond 5 years in the show cause notice, suggesting a recalculation from 5 years backward from the notice date, considering prevailing duty rates. The extended period of limitation was invoked due to the appellants' suppression of material facts, as they failed to inform the excise department before DTA clearances, indicating intent to evade duty.

4. The judgment rejected the appellants' argument against the extended limitation period, citing precedents that mere non-filing of declaration does not imply suppression, but positive omission or commission of facts with intent to evade duty. The Tribunal found the appellants' actions, despite being a registered EOU, constituted suppression and wilful misstatement, justifying the extended limitation period under Section 11A(1) of the Central Excise Act.

5. Lastly, the excessive penalty imposed on the firm and partners was addressed, considering financial hardship. The Tribunal, noting the excess duty paid, reduced the firm's penalty from Rs. 2,00,000 to Rs. 50,000, and partners' penalties from Rs. 50,000 each to Rs. 20,000 each. The duty liability for 5 years backward from the notice date was to be recalculated based on prevailing duty rates.

6. In conclusion, the Commissioner's order was modified, and the appeals were disposed of accordingly, with penalties reduced and duty liability recalculated for the appellants.