2008 (2) TMI 736 - AT - Central Excise

Summary

Issues:
1. Duty demand on grounds of price difference for captive consumption.
2. Challenge on limitation, interest, and penalty.

Analysis:
1. The assessees were paying 8% of the price of rectified spirit manufactured by them in compliance with Rule 57CC. However, scrutiny revealed that the price for captive consumption was reduced to Rs. 5/- per litre while the price for home consumption was raised to Rs. 7/- per litre. The department issued a Show Cause Notice for differential duty payment, interest, and penalty. The Commissioner confirmed the duty paid, imposed interest, and penalty under relevant provisions. The assessees challenged the demand on limitation grounds, interest, and penalty.

2. The assessees did not dispute the duty demand on merits but only challenged the limitation period, interest, and penalty. The price declarations and invoices did not indicate different rates for captive and home consumption. The lower rate for captive consumption was not due to market conditions but deliberate undervaluation as evidenced by a resolution. The resolution stated that a lower rate was set to evade duty payment due to the introduction of Rule 57CC. The Tribunal found this to be a clear case of suppression with an intent to evade duty payment. As the assessees admitted to not challenging the demand on merits, the Tribunal held the demand was not barred by limitation and upheld the duty, interest, and penalty imposed.

3. The Tribunal concluded that the assessees' actions constituted suppression to evade duty payment by misdeclaring the price of rectified spirit. As the assessees did not contest the demand on merits, the Tribunal upheld the duty demand, interest, and penalty imposed. Therefore, the Tribunal upheld the impugned order and rejected the appeal, emphasizing the intentional misdeclaration of prices for captive consumption as a form of duty evasion.