2006 (6) TMI 279 - AT - Central Excise

Summary

Issues:
Prayer to dispense with pre-deposit of duty amount and penalty. Adjudication of show cause notice on classification of product. Appeal against Commissioner's order. Scope of de novo proceedings. Imposition of penalty and demand confirmation.

Analysis:
The appeal before the Appellate Tribunal CESTAT, Mumbai involved a prayer to dispense with the pre-deposit of duty amount and penalties imposed on the appellants. The show cause notice issued to the appellants raised a demand of duties for a specified period, contending that the product manufactured by them was not classifiable as a medicament under Chapter 30 but as an organic chemical under Chapter 29. The Commissioner, in an earlier order, dropped the majority of the demand as barred by limitation, confirming only a specific amount within a six-month period and did not impose any penalty due to lack of mala fide intent on the part of the appellants, considering their compliance with necessary declarations and classification lists.

The appeal against the Commissioner's order was based on the argument that the demand should not have been confirmed even for the limited period due to a precedent set by the Hon'ble Supreme Court. The Tribunal remanded the case back to the Commissioner for fresh adjudication. In the subsequent de novo proceedings, the Commissioner confirmed the demand for the entire five-year period, citing wilful suppression by the appellants, contrary to the earlier adjudication. The appellants contended that since the demand had been dropped as time-barred by the previous authority and no penalty was imposed, it was impermissible for the present Commissioner to confirm the demand for the entire period and levy penalties, especially considering the finality of the earlier order.

The Tribunal agreed with the appellants' submissions, emphasizing that the scope of the de novo proceedings was limited to the disputed amount and not the entire demand raised in the show cause notice. Therefore, the Commissioner was not authorized to adjudicate the entire demand when the previous order dropping the demand based on limitation had been accepted by the Revenue without appeal. Consequently, the Tribunal directed the appellants to deposit the disputed amount within a specified timeframe and dispensed with the pre-deposit of the balance duty amount and penalties, staying their recovery during the appeal's pendency. All three stay petitions were disposed of accordingly.