1999 (6) TMI 406 - AT - Central Excise

Issues Involved:
1. Demand for Central Excise Duty under Section 11D(1) of the Central Excise Act.
2. Imposition of personal penalty under Rule 173Q read with Section 11AC of the Act.
3. Charging of interest under Section 11AB of the Act.
4. Applicability of the extended period of limitation under Section 11A(1).
5. Validity of the demand-cum-show cause notice in the absence of machinery provisions under Section 11D.

Issue-wise Detailed Analysis:

1. Demand for Central Excise Duty under Section 11D(1) of the Central Excise Act:
The Commissioner confirmed the demand of Rs. 1,03,58,583/- against the appellants for the excess quantity of iron and steel products received and sold without paying the corresponding Central Excise Duty. The appellants were found to have collected this amount as excise duty from their customers but did not deposit it with the Central Government as required by Section 11D(1). The appellants argued that the excesses and shortages were due to various operational reasons and that any duty demand against the stockyard amounted to double taxation since the manufacturing plants might have already been taxed.

2. Imposition of Personal Penalty under Rule 173Q read with Section 11AC of the Act:
The Commissioner imposed a personal penalty of Rs. 1,03,58,583/- on the appellants. The appellants contended that there was no willful misstatement or suppression of facts, and thus, the penalty was not justified. They also argued that Sections 11AB and 11AC were enacted in 1996 and could not be applied retrospectively to the period in question (March 1991 to June 1996).

3. Charging of Interest under Section 11AB of the Act:
The Commissioner ordered interest at 20% per annum on the demanded amount as per Section 11AB. The appellants argued that the provisions of Section 11AB, introduced in 1996, were not applicable to the periods before its enactment.

4. Applicability of the Extended Period of Limitation under Section 11A(1):
The Department invoked the extended period of limitation of five years under the proviso to Section 11A(1), alleging suppression of facts by the appellants. The appellants countered that the demand was based on their own statements and that there was no suppression or willful misstatement.

5. Validity of the Demand-cum-Show Cause Notice in the Absence of Machinery Provisions under Section 11D:
The appellants relied on the judgment of the Hon'ble Madras High Court in Eternit Everest Ltd. v. U.O.I., which held that in the absence of specific machinery provisions for adjudicating disputes under Section 11D, any proceedings under this section are without jurisdiction. The Tribunal noted that this decision was followed in Sundram Abex Ltd. and Amal Rasayan Ltd., and thus, the demand-cum-show cause notices were invalid.

Conclusion:
The Tribunal, after considering the arguments and case law, concluded that the absence of machinery provisions under Section 11D rendered the proceedings against the appellants invalid. The Tribunal set aside the impugned order and allowed the appeals with consequential relief in accordance with the law, following the precedent set by the Hon'ble Madras High Court in Eternit Everest Ltd.

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