2003 (12) TMI 358 - AT - Central Excise

Demand - Clandestine manufacture and removal - Footwear - Demand - Limitation - Suppression of facts

Summary

Issues: Duty demand confirmation, marketability of removed shoes, time-barred duty demand, suppression of facts, extended period of limitation

Duty Demand Confirmation:
The appellants challenged the order-in-appeal confirming duty demand and penalty imposed for removing 2,631 pairs of shoes clandestinely. The adjudicating authority observed the shoes were odd pairs in a semi-finished condition, not marketable. The appellants took out the pairs for buyer approval, retaining one shoe each for reference. The authority's findings on marketability were contradictory. The odd pairs were not fully finished or marketable, as per statutory records. Citing Dharangadhra Chemical Works Ltd. v. Union of India, the duty demand on non-marketable goods is not excisable. The duty demand for 1997-98 and 1998-99 was deemed time-barred due to proper record maintenance by the appellants, known to the Department.

Marketability of Removed Shoes:
The appellants argued the removed shoes were odd pairs in a semi-finished state, not marketable. The adjudicating authority's contradictory findings on marketability were highlighted. The odd pairs were retained for manufacturing reference and were not fully finished or suitable for sale. The statutory records confirmed the status of the odd pairs. Citing Dharangadhra Chemical Works Ltd. v. Union of India, non-marketable goods are not excisable.

Time-Barred Duty Demand:
The duty demand for 1997-98 and 1998-99 was challenged as time-barred. The show cause notice issued in 2001 alleged suppression of facts, but the appellants had maintained proper records known to the Department. The extended period of limitation was invoked despite the Department's knowledge of the removal of samples. Referring to Pushpam Pharmaceuticals Company v. Collector of Central Excise, Bombay, the omission to act does not constitute suppression of facts when both parties are aware of the situation.

Suppression of Facts and Extended Period of Limitation:
The appellants contended that no material facts were suppressed regarding the removal of samples. The authority's findings indicated the Department was aware of the removal activities. Citing Pushpam Pharmaceuticals Company v. Collector of Central Excise, Bombay, the extended period of limitation could not be invoked when facts were known to both parties. The duty demand was deemed time-barred based on the proper record maintenance by the appellants, known to the Department.

In conclusion, the impugned order of the Commissioner (Appeals) was set aside, and the appellants' appeal was allowed based on the non-marketable nature of the removed shoes, the time-barred duty demand, and the absence of suppression of material facts.