2009 (3) TMI 682 - AT - Central Excise

Summary

Issues:
1. Confirmation of demand of duty and penalty under Central Excise Act.
2. Discrepancy in quantity of materials and duty payment.
3. Dispute regarding time-barred demand and invocation of extended period of limitation.
4. Applicability of penalty under Section 11AC of the Central Excise Act.
5. Examination of plea of limitation and remand to original authority for further consideration.

Analysis:

Confirmation of Demand of Duty and Penalty:
The original authority confirmed a demand of duty against the appellants for certain quantities of M.S. scrap and seconds tubes allegedly clandestinely removed from the factory without payment of duty. The demand was raised under the proviso to Section 11A(1) of the Central Excise Act, with a penalty imposed under Section 11AC of the Act. The appeal against this order was rejected by the Commissioner (Appeals), leading to the present appeal before the Tribunal.

Discrepancy in Quantity of Materials and Duty Payment:
A discrepancy in the quantity of materials between private records and statutory records (RG1) was admitted by a company functionary, leading to the payment of duty on the differential quantity. The authenticity of private records was not disputed, and the duty payment was made without protest, indicating acceptance of the goods being cleared from the factory. The accountability of the materials was acknowledged by the party, supporting the demand of duty on the cleared goods.

Time-Barred Demand and Extended Period of Limitation:
The appellant argued that the demand was time-barred and challenged the invocation of the extended period of limitation under the proviso to Section 11A(1) of the Act. Citing relevant case laws, the appellant contended that the facts did not warrant the extended period. However, the Department argued that where clandestine removal was admitted, the extended period could be invoked, supported by the penalty under Section 11AC.

Applicability of Penalty under Section 11AC:
The appellant raised the issue that the show cause notice did not allege fraud or suppression as prerequisites for invoking the extended period of limitation. The lower authorities did not address this argument. The Tribunal remanded the case to the original authority to examine the plea of limitation, emphasizing that if the extended period applied, the penalty under Section 11AC and interest under Section 11AB would be applicable.

Remand and Opportunity for Hearing:
The Tribunal set aside the orders of both authorities and allowed the appeal by remanding the case to the original authority for a detailed examination of the plea of limitation. The party was directed to be given a reasonable opportunity to present their case in light of the Supreme Court's ruling on penalty and interest obligations.

This detailed analysis covers the issues of confirmation of duty demand, discrepancy in materials and duty payment, time-barred demand and extended limitation period, penalty applicability, and the remand for further consideration, ensuring a comprehensive understanding of the judgment.