1995 (6) TMI 181 - AT - Central Excise

Summary

Issues: Application for waiver of pre-deposit of duty and penalty imposed under Rule 173Q of the Central Excise Rules by the Collector of Central Excise, Chandigarh.

The judgment involves a dispute regarding the classification of noodles for excise duty purposes. The applicants contended that the noodles should be classified under sub-heading 1902.90 on nil rate of duty, while the department insisted on classifying them under Heading 1902.10, attracting duty. The Collector (Appeals) initially ruled in favor of the department, but the Tribunal later overruled this decision and upheld the classification decided by the Assistant Collector. Consequently, the applicants ceased paying duty on the goods until the Tribunal's order. The Collector then demanded duty for the period when the applicants did not pay, leading to the current application for waiver of pre-deposit.

The main contention raised by the applicants was that the demand for duty beyond a certain period was barred by limitation. They argued that the department was aware of their activities, and mere failure to file returns did not constitute suppression. The applicants emphasized the absence of intent to evade duty and cited relevant case law to support their position. On the other hand, the Respondent argued that the assessments were provisional, and the Collector's confirmation of the demand for the extended period was valid. The Respondent claimed that the proceedings before the Tribunal were a continuation of those before the Collector, justifying the demand beyond the usual limitation period.

The Tribunal analyzed the arguments presented by both parties. It noted that the approval of the classification list did not explicitly state that the assessments were provisional. The Tribunal found no basis for considering the assessments as provisional, especially given the invocation of Section 11A in the show cause notice and the imposition of a penalty. The Tribunal also highlighted that the department was aware of the applicants' activities and that duty had been paid before the Collector (Appeals)'s order. The Tribunal concluded that there was no justification for invoking the extended period for the demand and penalty. However, the Tribunal granted a waiver of pre-deposit for the remaining duty amount and penalty, subject to the production of evidence of prior duty payments. The recovery of the remaining amount was stayed pending the appeal process.

In summary, the Tribunal ruled in favor of the applicants regarding the limitation aspect and found no valid basis for the extended demand period. The Tribunal granted a waiver of pre-deposit for the remaining duty amount and penalty, subject to the submission of evidence of prior duty payments.