2003 (1) TMI 635 - AT - Central Excise

Summary

Issues:
- Appeal against demand of Central Excise duty, penalty, and confiscation.
- Revenue's appeal seeking enhancement of penalty.

Analysis:
1. Demand of Central Excise Duty, Penalty, and Confiscation:
The appellant, a company manufacturing ice-cream, entered into a sourcing agreement with other companies and Brooke Bond Lipton India Ltd. (BBLIL) to manufacture ice-cream under the brand name 'Kwality Walls'. The appellant ceased its manufacturing activity and filed price lists with the Excise Department based on the agreement. A show cause notice was issued alleging receipt of additional consideration beyond declared value from BBLIL and Hindustan Liver Ltd. The appellant contended that the transaction was on a principal-to-principal basis with price as the sole consideration. The Commissioner rejected the contentions and invoked the extended period under Section 11A of the Central Excise Act, 1944, citing suppression of material facts. However, the Tribunal found in favor of the appellant, holding that the show cause notice was barred by limitation as the agreement was made available to the department in 1995, and all transactions were based on the disclosed agreements.

2. Enhancement of Penalty:
The Revenue sought to enhance the penalty amount in a separate appeal. The Tribunal, having set aside the order confirming the demand, dismissed the Revenue's appeal for enhancing the penalty. The Tribunal's decision was based on the finding that the show cause notice for the penalty enhancement was also barred by limitation, aligning with the earlier ruling on the main issue of demand of Central Excise duty. The Tribunal emphasized that all transactions were based on agreements known to the department since 1995, and no new material outside the disclosed agreements was presented by the Revenue to support the penalty enhancement.

In conclusion, the Tribunal ruled in favor of the appellant, setting aside the demand of Central Excise duty, penalty, and confiscation, as well as dismissing the Revenue's appeal for enhancing the penalty. The key factor in both decisions was the limitation period, as the Tribunal found that all relevant agreements and transactions were disclosed to the department in a timely manner, precluding any allegations of suppression of material facts.