2006 (7) TMI 490 - AT - Central Excise

Summary

Issues Involved:
1. Duty demand on illicit removal of processed manmade fabrics.
2. Imposition of penalties and confiscation of assets.
3. Barred by limitation defense.
4. Applicability of Section 11AB regarding recovery of interest.

Detailed Analysis:

1. Duty Demand on Illicit Removal of Processed Manmade Fabrics:
The Commissioner confirmed a duty demand on the illicit removal of processed manmade fabrics by M/s. Annapurna Industries Pvt. Ltd. through kachcha delivery challans to various merchant manufacturers. The duty demand was also confirmed on another quantity of processed MMF removed illicitly by the same assessee. The clearance of goods was made to M/s. Pankaj Silk Mills. The Tribunal upheld the duty demands, rejecting the contention that the demands were barred by limitation. The Tribunal noted that the evidence, including statements of merchant manufacturers, supported the charge of clandestine removal. The Tribunal held that the notice adjudicated by the order was not hit by time-bar. The duty demands were confirmed, and the liability of the mills to penalty was upheld.

2. Imposition of Penalties and Confiscation of Assets:
The Commissioner imposed a penalty on the processor and ordered the confiscation of assets used in the manufacture/storage/removal of the offending excisable goods. The penalty was also imposed on the chairman-cum-managing director of the mills. The Tribunal reduced the penalty on the chairman-cum-managing director and set aside the confiscation of assets of the processors. The Tribunal held that the severe action of confiscation was not warranted in this case against the assessees.

3. Barred by Limitation Defense:
The appellants argued that the demands were barred by limitation, citing a judgment of the apex court. However, the Tribunal found that the evidence, including statements of merchant manufacturers, was crucial in determining the clandestine removal. The Tribunal distinguished the present case from the cited judgment, emphasizing that all relevant facts were brought on record through the statements of merchant manufacturers, which were recorded from 1995 onwards. The Tribunal concluded that the notice adjudicated was not hit by time-bar.

4. Applicability of Section 11AB Regarding Recovery of Interest:
The Tribunal dismissed the appeal of the Revenue, holding that Section 11AB could not be applied against the processors for the offence of clandestine removal that occurred prior to September 1996. The Tribunal referred to a Board's circular stating that Section 11AB could only be invoked for clearances after September 1996, irrespective of the date of the adjudication order. Thus, the Commissioner's decision not to levy interest on the duty amounts was upheld.

In conclusion, the Tribunal partly allowed the appeals filed by the processors and the chairman-cum-managing director, confirming duty demands and penalties while reducing the penalty amount and setting aside the confiscation of assets. The Revenue's appeal was dismissed concerning the applicability of Section 11AB for interest recovery.