2005 (2) TMI 710 - AT - Central Excise

Summary

Issues:
1. Whether the benefit of Notification No. 120/75-C.E., dated 30-4-1975 is available to the goods manufactured by M/s. SIMAC Group (India) Pvt. Ltd.
2. Validity of the show cause notice issued for demanding duty and denying the benefit of the notification.
3. Power of the Collector under Section 35A of the Central Excise Act to extend the period of demand of duty and impose penalty.

Analysis:
1. The main issue in this appeal was whether the benefit of Notification No. 120/75-C.E. was available to the goods manufactured by M/s. SIMAC Group. The notification allowed excisable goods falling under Tariff Item 68 to discharge duty based on invoice prices, provided there was no influence from any commercial, financial, or other relationship between the manufacturer and the buyer. The Tribunal found that the prices charged by the appellants to M/s. Singer were influenced by various factors, including loans, conditions on disposal of goods, and control over manufacturing aspects. Consequently, the Tribunal held that the appellants were not eligible for the notification's benefit.

2. The validity of the show cause notice issued for demanding duty and denying the benefit of the notification was also a crucial issue. The appellants argued that the Collector did not have the power to extend the period of demand beyond what was mentioned in the notice. The Tribunal agreed with this argument, citing the limitations under Section 35A of the Central Excise Act. As the notice was issued in 1976, the Collector could not extend the demand period up to 1979. Therefore, the demand of duty was limited to the period specified in the notice, and the penalty imposed was set aside since it was not part of the original notice.

3. Regarding the power of the Collector under Section 35A to extend the period of demand and impose penalties, the Tribunal clarified that the Collector's authority was restricted to the period mentioned in the show cause notice. The Collector could review decisions but could not enhance the demand period beyond what was initially notified. Additionally, the Collector could not impose penalties that were not part of the original notice. Therefore, the Tribunal limited the demand of duty to the specified period and set aside the penalty imposed on the appellants.

In conclusion, the Tribunal ruled that the appellants were not eligible for the benefit of Notification No. 120/75-C.E. and restricted the demand of duty to the period mentioned in the show cause notice, setting aside the penalty imposed beyond that period.