2009 (6) TMI 756 - AT - Central Excise

Summary

Issues Involved:
The issues involved in this case are the treatment of clearances for captive consumption, the invocation of extended period for duty demand, and the burden of proof on the department to establish intention to evade duty.

Treatment of Clearances for Captive Consumption:
The appellant company had two factories engaged in spinning and weaving, located in different areas. The dispute arose when cotton yarn manufactured by one unit was sold to another unit within the same company. The department contended that these clearances should be treated as captive consumption, leading to a demand for Central Excise duty. The impugned order confirmed the demand and imposed penalties on the units involved.

Invocation of Extended Period for Duty Demand:
The department issued show cause notices invoking an extended period for duty demand, alleging suppression of facts. The appellant argued that since earlier show cause notices had been adjudicated, suppression could not be invoked. The appellant also contended that the department was aware of the transactions, making the show cause notices time-barred. The Tribunal found that the extended period could not be alleged against the appellant, as the intention to evade duty was not established.

Burden of Proof on the Department:
The Tribunal emphasized that for invoking the extended period under Section 11A, the department must prove suppression of facts, mis-declaration, fraud, or collusion with intent to evade duty. In this case, the Tribunal found that the department failed to discharge its burden of proving an intention to evade duty. As the duty demand did not survive, the penalties imposed on the appellant were set aside, and the impugned order was overturned, granting relief to the appellants.