2006 (10) TMI 332 - AT - Central Excise

Summary

Issues involved:
The issues involved in the judgment are non-payment of duty on clearances, invocation of extended period u/s 11A(1) proviso, applicability of judicial authorities regarding duty payment, and imposition of penalty u/s 11AC.

Non-payment of duty on clearances:
The case involved M/s. Sundaram Industries, Madurai clearing "moulds" without paying the due duty from 1997 to 2003. The goods were moved to the assessee's sister unit in Gurgaon without duty payment. The appellant failed to provide an acceptable explanation for non-payment of duty and the higher value shown in certain clearances. The Commissioner established misdeclaration and suppression of facts, leading to the demand for duty and penalty.

Invocation of extended period u/s 11A(1) proviso:
The appellant argued against the invocation of the extended period citing the decision in Amco Batteries Ltd. v. CCE. However, the Commissioner relied on the observation of the Larger Bench of the apex Court, stating that the extended period could be invoked based on various factors, including misdeclaration and suppression of facts. The Tribunal held that the larger period of limitation could not be invoked in this case, as the duty paid would have been available as Modvat credit to the sister unit.

Applicability of judicial authorities regarding duty payment:
The appellant cited the decision in Jay Yuhshin Limited v. CCE and Sterlite Industries (India) Ltd. v. CCE to argue against the demand made invoking the extended period. The Tribunal held that the ratio of Jay Yuhshin applied to the case, where short payment of duty between units of the same assessee entitled to Modvat credit did not warrant the invocation of the extended period.

Imposition of penalty u/s 11AC:
After considering the records and submissions, the Tribunal found the irregularity in non-payment to be an error without any motive for evasion. The Tribunal concluded that the appellant, as one of the largest duty-paying units, had no reason to evade payment of duty. Therefore, the duty demanded invoking the extended period was set aside, and the penalty under Section 11AC was not applicable.