2010 (4) TMI 938 - AT - Central Excise

Validity of second SCN - invocation of extended period of limitation - proviso to Section 11A of Central Excise Act, 1944 - penalty - Held that - The fact that the show cause notice had been issued in 2000 cannot be taken as the issue of show cause notice on the same subject since the show cause notice and the proceedings under consideration in the present proceedings relate to duty demand on past clearances before the date of seizure - Since the first show cause notice relates to only confiscation of seized goods and penalty and duty thereon, department cannot be prevented or barred for issuing another show cause notice in respect of clearances of goods prior to the date of seizure. Penalty - Held that - An option to pay duty, interest and penalty within 30 days and in the event of such payment, the penalty gets reduced to 25%, has not been made in the Order in Original - the option is required to be given to the Company to deposit entire duty amount with interest (if any) and penalty to the extent of 25% within 30 days, from the date of receipt of this order. Decided partly in favor of Revenue.

Summary

Issues:
Manufacture of PVC films without payment of Central Excise duty, issuance of show cause notices in 2000 and 2004, duty demand, penalty imposition, appeal against the order setting aside the 2004 show cause notice, interpretation of Section 11A of Central Excise Act, 1944, relevance of past clearances before the date of seizure, application of Customs Act, 1962, time limit for issuing show cause notices, nullification of Section 11A, imposition of penalty, reduction of penalty amount, option for payment within 30 days.

The judgment involves a case where the respondents were manufacturing PVC films without paying Central Excise duty by receiving PVC films in jumbo rolls, printing them on a job work basis, and clearing them without duty payment. Two show cause notices were issued in 2000 and 2004, with the latter proposing duty demand and penalty under Section 11AC of the Central Excise Act, 1944. The Original Adjudicating Authority confirmed the duty demand, interest, and penalties on the respondent-Company and its employees. The Commissioner (Appeals) set aside the 2004 notice, stating that a second notice on the same issue of suppression could not be issued after the 2000 notice. The Revenue appealed this decision, arguing that the 2000 notice related to confiscation and penalty, not duty demand on past clearances before the seizure date.

The Tribunal found that the 2000 notice focused on seized goods, while the 2004 notice concerned duty demand on past clearances before the seizure date. The Tribunal agreed with the Revenue that issuing a second notice was permissible under Section 11A of the Central Excise Act, 1944, which allows show cause notices within five years from the relevant date in cases of suppression or duty evasion. It was highlighted that the Commissioner's cited decisions were not relevant as they involved duty demands on both occasions, unlike the present case where the 2000 notice related only to seized goods. The Tribunal concluded that the appeal filed by the Revenue needed to be allowed, overturning the Commissioner (Appeals) decision.

Regarding the penalty imposed, the Tribunal noted that the option to pay duty, interest, and penalty within 30 days with a penalty reduction to 25% was not provided in the Original Order. Citing a previous case, the Tribunal extended the option to the Company to deposit the full duty amount with interest and a 25% penalty within 30 days. Failure to comply would result in the penalty amount equalling the duty amount. This decision aimed to ensure fairness and compliance with penalty provisions while providing an opportunity for reduced penalty payment within the specified timeframe.