2008 (3) TMI 594 - AT - Central Excise

Summary

Issues involved: Invocation of longer period for demanding differential duty, justification for extended period, imposition of penalty, limitation on demand.

The appeal was filed against the Orders-in-Appeal No. 13 & 14/2007 (H-III) C.E., passed by the Commissioner of Central Excise, Customs & Service Tax (Appeals), Hyderabad. The main issue was whether the Revenue was justified in invoking a longer period for demanding differential duty, with no dispute on the valuation. The appellants were manufacturing Cable Jointing Kits, which were not excisable, but they were also manufacturing the intermediate product "Heat Shrinkable Sleeves (HSS)" on which duty was liable to be paid. The appellants had been discharging duty based on adopted costing and had submitted final cost data in 2002. The show cause notice, issued in 2005 for the period from October 2000 to March 2002, alleged suppression of facts.

Upon careful consideration, it was found that the data necessary for calculating the differential duty had been submitted in 2002. Therefore, the show cause notice demanding differential duty should have been issued within the normal period, as the appellants had been filing monthly returns and providing cost data. The Commissioner (Appeals) had set aside the penalty imposed on the Company and the Manager (Accounts) because the appellants did not contest the duty demand on merits. When the appellate authority is satisfied that there was no cause for the penalty, it should have held that the demand was barred by limitation. The Judge concluded that the show cause notice was indeed barred by limitation, and there was no merit in the impugned order. Consequently, the appeal was allowed with consequential relief.