2002 (5) TMI 693 - AT - Central Excise

Summary

Issues:
1. Issuance of show cause notices to parties regarding Central Excise duty on biris.
2. Confirmation of duty, cess, and penalties by Deputy Commissioner of Central Excise.
3. Appeals filed before Commissioner (Appeals) challenging the penalties imposed.
4. Analysis of the legality of the show cause notices and penalties by the Appellate Tribunal CEGAT, New Delhi.

Issue 1:
The case involved the issuance of show cause notices to M/s. Cee Jay Tobacco Limited and M/s. Chhotabhai Jethabhai Patel & Co. regarding Central Excise duty on biris. The Central Excise Officers found discrepancies in the stock verification of biris received by the latter party, leading to the issuance of notices calling for explanations and penalties under Central Excise Rules, 1944.

Issue 2:
Upon considering the replies from the notice parties, the Deputy Commissioner of Central Excise, Bhopal confirmed a duty of Rs. 15,135/- and a cess of Rs. 857/- on M/s. Cee Jay Tobacco Limited under Section 11A of the Central Excise Act, 1944. Additionally, penalties were imposed on both parties under relevant Central Excise Rules.

Issue 3:
Both parties appealed before the Commissioner (Appeals) challenging the penalties imposed. The Commissioner (Appeals) analyzed the situation and concluded that the second show cause notice issued after almost two years was time-barred and lacked legal basis, rendering the penalties unsustainable. The Commissioner held that the first show cause notice had become infructuous, and the penalties imposed were void ab initio.

Issue 4:
The Appellate Tribunal, CEGAT, New Delhi, heard the Revenue appeals against the Commissioner (Appeals) order. The Tribunal considered the arguments presented, including the contention that the limitation period for demanding duty could still apply even if the Department had prior knowledge of suppression or fraud. However, the Tribunal found that the second show cause notice, invoking extended period clauses, was unjustified as the Department had already issued a notice without such allegations. The Tribunal emphasized that no new facts emerged after the initial notice, making the subsequent notice time-barred and lacking merit. The Tribunal dismissed the appeals, affirming that the penalties were unsustainable and the show cause notice void.

This detailed analysis of the legal judgment highlights the issuance of show cause notices, confirmation of duties and penalties, appeals challenging penalties, and the ultimate decision by the Appellate Tribunal regarding the legality and sustainability of the penalties imposed.