2004 (12) TMI 430 - AT - Central Excise

Summary

Issues Involved:
Appeal against reversal of duty and penalty by Commissioner (Appeals) | Application of Section 11D for recovery of duty | Allegations of clandestine removal of excisable goods | Time limitation for raising duty demand | Invocation of Section 11A and Section 11D | Legality of impugned order

Analysis:

1. Appeal against Reversal of Duty and Penalty:
The appeal was filed by the Revenue against the order of the Commissioner (Appeals) who had set aside the duty and penalty imposed on the respondents. The Revenue contended that there was ample evidence to show that the respondents collected duty from buyers but did not remit it to the Government. The learned SDR argued that the duty and penalty were wrongly set aside by the Commissioner (Appeals).

2. Application of Section 11D for Recovery of Duty:
The Revenue invoked Section 11D for recovery of Government dues from the respondents. However, the learned Counsel for the respondents argued that Section 11D did not apply to the case, especially after a period of more than 5 years had passed. The Tribunal analyzed the allegations in the show cause notice, which accused the respondents of clandestine removal of excisable goods without paying duty.

3. Allegations of Clandestine Removal of Excisable Goods:
The show cause notice detailed how the respondents were involved in the clandestine manufacture and removal of excisable goods, specifically textile items and processed cotton fabric, during a certain period. The respondents collected duty from buyers but did not pay it to the Government, violating relevant provisions. The notice was served on the respondents in 2004.

4. Time Limitation for Raising Duty Demand:
The Tribunal observed that the duty demand raised by the Revenue for the clandestine removal of goods was time-barred under Section 11A, even with the extended period of five years. The Department attempted to use Section 11D to recover the duty, but the Tribunal found this approach impermissible under the law.

5. Invocation of Section 11A and Section 11D:
The Tribunal clarified that Section 11D could only be invoked when there had been an assessment or determination of duty, followed by the realization of an excess amount from buyers. In this case, there was no assessment or determination of duty for the goods removed clandestinely by the respondents. The Tribunal rejected the argument that self-assessment occurred when the respondents issued invoices to buyers without paying any duty.

6. Legality of Impugned Order:
After thorough analysis, the Tribunal upheld the impugned order of the Commissioner (Appeals) and dismissed the Revenue's appeal. It concluded that Section 11D did not apply to the case of the respondents, and the duty recovery attempt was time-barred under Section 11A, rendering the Department's invocation of Section 11D impermissible.

This comprehensive analysis of the judgment highlights the key legal issues, arguments presented by both parties, and the Tribunal's reasoning in arriving at its decision to uphold the impugned order.