2002 (6) TMI 550 - AT - Central Excise

Summary

Issues:
1. Duty demand and penalties imposed on appellants for alleged suppression of production and clandestine removal of goods.
2. Time limitation for duty demand raised by the show cause notice.
3. Evidence supporting the alleged clandestine removal of goods.

Analysis:
1. The judgment concerns appeals against an order confirming duty demand and penalties on the appellants for alleged suppression of production and clandestine removal of goods. The appellants, engaged in manufacturing I.C. Diesel Engines and Diesel Generating Sets, were accused of suppressing production during a specific period. The Central Excise officers seized excess stock and alleged the use of duplicate invoices. The Commissioner confirmed the duty demand and penalties, which the appellants contested, claiming compliance with the Modvat scheme and denying clandestine activities.

2. The appellants argued that the duty demand raised through the show cause notice was time-barred, as the Modvat credit available to them exceeded the duty payable rate. Citing a precedent, the appellants contended that if the duty demanded is less than the Modvat credit available, the intention to evade payment did not exist, making the extended period of limitation inapplicable. The Tribunal found the Modvat credit exceeded the duty payable, indicating no intention to evade duty, thus rendering the demand time-barred.

3. The appellants further argued that there was insufficient evidence to prove clandestine removal of goods, pointing out no discrepancies in stock, excess consumption, or other irregularities. However, the Tribunal deemed it unnecessary to delve into the evidence due to the time-barred nature of the demand. Consequently, the Commissioner's order was set aside in its entirety, and the appeals of the appellants were allowed based on the limitation issue alone, without delving into the evidence supporting clandestine removal allegations.