2007 (1) TMI 427 - AT - Central Excise

Summary

Issues:
1. Demand of duty and penalty on unbranded chewing tobacco.
2. Invocation of larger period of limitation based on suppression of facts.
3. Clubbing of tobacco clearances of 10 SSI units with the appellants.
4. Recognition of 10 SSI units as separate and independent manufacturing units.
5. Settlement under KVS scheme related to the 10 SSI units.
6. Contention regarding time-bar for filing RT-12 returns.

Analysis:

1. The judgment deals with the confirmation of a demand of duty of over Rs. 3.3 crores against the appellants for unbranded chewing tobacco and 10 SSI units acting as 'dummy units'. The penalty under Section 11AC of the Central Excise Act was also imposed. The tribunal examined the records and found that the demand was based on the clubbing of tobacco clearances of the SSI units with the appellants. However, a clear finding indicated that the 10 SSI units were recognized as separate units by the department, raising doubts on the sustainability of the demand.

2. The larger period of limitation was invoked due to the alleged suppression of facts by the assessee. The tribunal noted that the 10 SSI units were not in possession of necessary machinery for manufacturing chewing tobacco and were getting their products made at the appellants' premises. Despite this, the tribunal found that the department's claim that the SSI units were 'dummies' of the appellants might not be legally sustainable, especially considering a prior settlement under the KVS scheme related to the units.

3. The judgment discussed the issue of time-bar raised by the appellants, who argued that they regularly filed RT-12 returns during the disputed period, and no information was concealed. The tribunal acknowledged the need for further examination of this aspect at the final hearing stage. Ultimately, finding a prima facie case for the appellants on merits, the tribunal granted waiver of pre-deposit and stay of recovery concerning the duty and penalty amounts, ordering the same accordingly.

This detailed analysis of the judgment provides insights into the various legal issues addressed by the tribunal, including the demand of duty, suppression of facts, recognition of SSI units, settlement under the KVS scheme, and the contention regarding the time-bar for filing returns. The decision to grant waiver of pre-deposit and stay of recovery reflects the tribunal's preliminary assessment of the case in favor of the appellants based on the available evidence and legal considerations.