2009 (6) TMI 814 - AT - Central Excise

Demand - Limitation, extended period - Penalty - Held that - demand beyond the normal period, from the date of issuance of show cause notice, would be barred by limitation. The authorities would quantify the demand within the normal period. As regards penalty imposed under Section 11AC, having held that the appellants was not guilty of any mala fide intention, we find no justification for imposition of the same. Accordingly, penalty imposed upon the appellants under Section 11AC and under Rule 25, is set aside.

Summary

Issues:
Demand of duty classification under Central Excise Tariff Act, 1985; Point of limitation for show cause notice issuance; Imposition of penalty under Section 11AC and Rule 25 of Central Excise Rules.

Analysis:

1. Demand of Duty Classification: The judgment deals with the confirmation of a duty demand against the appellants based on the classification of Svit-C Powder and Alpromax Granules under Chapters 17 & 21 of the Central Excise Tariff Act, 1985. The demand was raised through a show cause notice dated 3-11-2004 for the period from April 2001 to June 2004. The appellants did not dispute the classification but challenged the demand on the grounds of limitation.

2. Point of Limitation: The appellants, through their advocate, argued that the show cause notice was issued beyond the normal period of one year available to the Revenue during the relevant period. They submitted declarations under Rule 173B of the Central Excise Rules claiming the classification of both products under Chapter 30. The advocate contended that there was no suppression or misstatement with intent to evade duty. The Tribunal observed that the Revenue did not object to the classification claim made by the appellants at the relevant time. As a result, the longer period of limitation could not be invoked subsequently. The Tribunal concluded that the demand beyond the normal period from the date of the show cause notice issuance would be barred by limitation.

3. Imposition of Penalty: The Tribunal further addressed the imposition of penalties under Section 11AC of the Act and Rule 25 of the Central Excise Rules. Since it was established that the appellants did not act with any mala fide intention or suppression to justify invoking the longer period of limitation, the Tribunal found no justification for the imposition of penalties. Consequently, the penalties imposed under Section 11AC and Rule 25 were set aside.

In conclusion, the Tribunal disposed of the appeal by holding that the demand beyond the normal limitation period was not sustainable, and the penalties imposed were unwarranted due to the absence of mala fide intention or suppression on the part of the appellants.