2007 (8) TMI 527 - AT - Central Excise

Summary

Issues:
Appeal against setting aside demand of duty and penalty by Commissioner (Appeals), application for reduction of furnace parameters, delay in granting permission, time limitation for issuing Show Cause Notice under Section 11A, interpretation of mandatory requirement for Show Cause Notice, relevance of previous court decisions on similar matters.

Analysis:
The appeal was filed by the Revenue against the order of the Commissioner (Appeals) setting aside the demand of duty and penalty. The Commissioner (Appeals) based the decision on the fact that the application for reduction of furnace parameters was made by the appellant on 13-11-1997, and the parameters were reduced on 15-12-97, but the Department granted permission only on 19-1-98. The Commissioner held that the delay in granting permission was caused by the Department, and the appellant cannot be penalized for it. Additionally, the Commissioner noted that the furnace remained closed from 14-11-97 to 18-2-98, making any recovery of duty during that period unjustified. The Commissioner also highlighted that the Show Cause Notice was issued beyond the 6-month period, rendering the demand time-barred as per the decision of the Punjab & Haryana High Court in a specific case.

The learned D.R. argued that the Commissioner (Appeals) followed the decision of the Punjab & Haryana High Court in a particular case, while the Larger Bench of the Tribunal had a different view on the time limitation under Section 11A. The learned Advocate for the respondent reiterated the Commissioner's findings and emphasized the High Court's decision in favor of the respondent as a basis for upholding the Commissioner's order. The Revenue filed a Reference Petition before the Hon'ble High Court of Punjab & Haryana in a related case, seeking clarity on the mandatory requirement of issuing a Show Cause Notice under Section 11A for recovery of arrears of revenue.

The Hon'ble High Court dismissed the petition, stating that compliance with the provisions of Section 11A is mandatory as per the Apex Court's decision. Based on the High Court's findings and the time limitation issue, the Tribunal found no reason to interfere with the Commissioner (Appeals) order. The Tribunal noted that the demand was raised based on an ACP Order for a specific period, and as the demand was beyond the limitation period, the appeal filed by the Revenue was rejected.