2009 (9) TMI 847 - AT - Central Excise

Summary

Issues Involved:
1. Utilization of inputs in the manufacture of the final product.
2. Invocation of extended period of limitation.
3. Imposition of separate penalties on partners and authorized signatory.

Summary:

1. Utilization of Inputs in the Manufacture of the Final Product:
The primary issue was whether the inputs such as Atatic Poly Propylene and Pentaerythritol were utilized in the manufacture of Cable Filling Compound. The appellants argued that the statutory documents and chemical test reports supported their claim of utilization. The Department's test reports were inconclusive, with the first report not identifying the polymer and the second report showing the absence of certain inputs. The expert's statement indicated that Pentaerythritol could lose its identity during the manufacturing process. The Tribunal found that the appellants' records, including stock registers and statutory returns, supported their claim of utilization. The Department failed to provide cogent evidence to disprove the appellants' claim.

2. Invocation of Extended Period of Limitation:
The second issue was whether the Department could invoke the extended period of limitation for the show cause notice dated 5-3-2002, covering the period from December 1997 to September 1999. The Tribunal noted that three earlier show cause notices had been issued for subsequent periods on the same grounds. The Tribunal held that the ongoing investigation did not justify the invocation of the extended period of limitation, as the facts and grounds were already known to the Department. Therefore, the invocation of the extended period was not sustainable.

3. Imposition of Separate Penalties on Partners and Authorized Signatory:
The third issue was whether separate penalties could be imposed on the partners and the authorized signatory when the partnership firm had already been penalized. The Tribunal held that once the duty liability could not be established, the question of imposition of penalty did not arise. Consequently, the penalties imposed on the partners and the authorized signatory were also set aside.

Conclusion:
The appeals were allowed, and the impugned order was set aside with consequential relief. The Tribunal found that the Department failed to establish non-utilization of the inputs and that the invocation of the extended period of limitation was not justified. The penalties imposed on the partners and the authorized signatory were also set aside.