2006 (9) TMI 381 - AT - Central Excise

Demand of central excise duty - Limitation - Suppression - Penalty - Interest on demand u/s 11AB - whether the fact of production of the pipes from imported goods was disclosed to revenue - HELD THAT - We find that appellant s duty paying documents did not at all mention the source of the inputs, while that was the crucial issue in relation to rate of duty. No mention about the source of the inputs was made in the classification declaration filed also. Therefore, we uphold the order in so far as it relates to limitation also. Duty paying documents, namely, gate passes and classification declaration which is the declaration relating to rate of duty, both did not disclose the source of raw materials, while the rate of duty depended entirely on that fact. In this factual situation, the revenue is right in contending that there is deliberate suppression of facts, which attracts penalty. We, therefore, uphold the imposition of penalty. However, taking all the facts and circumstances into account, penalty is reduced to Rs. 1,00,000/-(rupees one lakh only). It is being pointed out that such a demand is clearly contrary to sub-clause (2) of Section 11AB itself. There is merit in this contention. However, that does not settle the dispute relating to interest. It is well settled that statutory interest will be attracted irrespective of whether the claim has been specifically made in the orders or not. Therefore, revenue will be at liberty to claim interest as permissible under the statute at the rates in force during various periods. The appeal is ordered in the above terms.

Summary

Issues:
Appeal against central excise duty demand, penalty, and interest under Section 11AB arising from the classification of pipes and tubes produced from imported iron and steel.

Central Excise Duty Demand:
The appellant, a manufacturer of pipes and tubes, faced a demand for central excise duty exceeding Rs. 3 lakhs due to the misclassification of products made from imported iron and steel. The appellant initially contested the demand but later conceded, focusing on limitation, penalty, and interest. The Commissioner did not delve into the merits, leading to the current appeal. The Tribunal refused to reopen the issue on merits as the appellant had previously admitted liability, and crucial information regarding the source of inputs was missing from duty paying documents and classification declarations. Consequently, the Tribunal upheld the order regarding limitation.

Penalty Imposition:
Regarding penalty, the appellant argued against the equal penalty amount due to the demand's vintage and the absence of a specified clause in the show cause notice. Citing a Supreme Court case, the appellant contended that the notice should specify the contravened rule clause. However, the Tribunal agreed with the revenue, emphasizing that the duty documents did not disclose the source of raw materials crucial for determining the duty rate. Despite reducing the penalty to Rs. 1,00,000, the Tribunal upheld its imposition due to deliberate facts suppression.

Interest Demand under Section 11AB:
The appellant challenged the interest demand under Section 11AB, arguing it contradicted the statute's sub-clause (2). While acknowledging this, the Tribunal clarified that statutory interest is applicable regardless of specific claims in orders. Hence, the revenue can claim interest as per statutory rates during various periods.

In conclusion, the Tribunal dismissed the appeal, maintaining the central excise duty demand, reducing the penalty, and upholding the interest claim, emphasizing the importance of accurate documentation and compliance with statutory requirements in excise matters.