2009 (4) TMI 694 - AT - Central Excise

Issues:
1. Liability of Central Excise duty on brass ingots and refined brass dross.
2. Re-quantification of demand of duty on pittal pat.
3. Imposition of penalty disproportionate to the duty demanded.
4. Issue of limitation in relation to the demand period.
5. Applicability of penalty under Section 11AC.

Analysis:

1. Liability of Central Excise duty on brass ingots and refined brass dross:
The Tribunal held that brass ingots and refined brass dross manufactured and cleared by the appellants are liable to Central Excise duty. However, the Tribunal clarified that there is no duty liability on brass dross (ravali) but products like brass ingots/pittal pat are indeed liable to duty. The Tribunal emphasized that the process of manufacturing petal pat from ravali amounts to a new product creation, making it subject to duty. The Tribunal directed the concerned authority to re-quantify the demand of duty on pittal pat based on the description in the invoices.

2. Re-quantification of demand of duty on pittal pat:
The Commissioner re-quantified the duty liability on pittal pat to Rs. 22,13,959/- and imposed a penalty of Rs. 10 Lakhs. The appellant argued that the demand prior to a certain date was barred by limitation. However, the Commissioner disagreed, stating that the issue of limitation can be raised at any stage and that the extended period for demand was correctly applied due to the appellants not informing the department about the manufacturing activities. The Commissioner reduced the duty demand to Rs. 20,22,895/- and imposed a penalty of Rs. 4 lakhs considering the classification issue and the circumstances of the case.

3. Imposition of penalty disproportionate to the duty demanded:
The appellant contended that the penalty imposed was disproportionate to the duty demanded, citing a Tribunal decision in a similar case. The Commissioner acknowledged the classification dispute but maintained that penalty was still imposable. However, the penalty was reduced to Rs. 4 lakhs from the initial Rs. 10 lakhs, considering the nature of the case and the need for a lenient view on the penalty amount.

4. Issue of limitation in relation to the demand period:
The appellant argued that the demand prior to a specific date was time-barred due to the issuance of the show cause notice after that date. The Commissioner disagreed, stating that the demand beyond the extended period of 5 years is not recoverable. The Commissioner clarified that the Tribunal's observations on the extended period did not relate to the demand beyond the limitation period. The demand for duty was reduced to Rs. 20,22,895/- based on this analysis.

5. Applicability of penalty under Section 11AC:
The Commissioner addressed the applicability of penalty under Section 11AC, noting that the penalty was mandatory under the section. Despite this, the Commissioner reduced the penalty amount to Rs. 4 lakhs considering the circumstances and the classification issue involved in the case.

In conclusion, the judgment clarified the duty liability on specific products, addressed the re-quantification of duty demand, considered the issue of penalty proportionality, analyzed the limitation period for demand, and applied the penalty provision under Section 11AC while reducing the penalty amount based on the case specifics.

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