2005 (3) TMI 590 - AT - Central Excise

Summary

Issues:
1. Whether demand of Central Excise duty for the period from January, 1994 to February, 2000 can be demanded by issuing the show cause notice on 26-6-2003.

Analysis:
The main issue in the appeals filed by M/s. Premier Instruments and Controls and their Manager Stores is the demand of Central Excise duty for a specific period. The appellants manufactured tools without paying duty and later voluntarily paid duty for tools sent to job workers. A show cause notice was issued in 2003 demanding duty for the period from 1994 to 2000, alleging undervaluation. The appellants argued against the demand citing time limitations under Section 11A of the Central Excise Act. The Commissioner upheld the demand, relying on a previous case. Both sides presented arguments, with the Department justifying the demand for the entire period.

Upon considering the submissions, it was noted that the appellants did not follow Central Excise formalities while clearing tools to job workers. The relevant date for issuing a show cause notice is crucial, as per Section 11A of the Central Excise Act. The notice issued in 2003 was beyond the five-year limit for demanding duty from 1994 to May 1998. However, duty could be demanded for the period from June 1998 to December 1998 due to suppressed facts. The disclosure made by the appellants in December 1998 impacted the extended period of limitation for demanding duty.

The demand for duty from January 1999 to the financial year 1999-2000 was also contested. The appellants' disclosure in December 1998 about clearing tools to job workers was crucial. The extended period of limitation could not be invoked post this disclosure. Citing a previous Tribunal decision, it was emphasized that the extended period of limitation is applicable only if there is suppression of facts. The show cause notice issued in 2003 for demanding duty beyond the normal one-year period was deemed unsustainable.

The judgment clarified that the decision in the MC Mammen case was not relevant to the present matter. The Tribunal's decision in the MC Mammen case focused on the rate of duty applicable to goods cleared, not on the relevant date for issuing show cause notices for demanding unpaid duty. The judgment concluded that the show cause notice for demanding Central Excise duty was sustainable only for the period from June 1998 to December 1998. The impugned order was set aside, and the matter was remanded for reconsideration, with penalties imposed only for the specified period. The penalty imposed on the Deputy Manager of the Store was also set aside.