2009 (11) TMI 751 - AT - Central Excise

Summary

Issues:
1. Challenge to order demanding excise duty and penalty under Notification No. 8/97-C.E.
2. Dispute over the invocation of the extended period of limitation for issuing show cause notice.
3. Lack of independent evidence supporting allegations of excess production.
4. Calculation of duty liability under the proviso to Section 3 of the Central Excise Act.
5. Financial hardship due to the factory premises being taken over by a bank in recovery proceedings.

Detailed Analysis:
1. The appellants contested the order demanding excise duty and penalty under Notification No. 8/97-C.E., challenging the denial of exemption for excess production. The dispute revolved around the inspection date, show cause notice issuance, lack of buyer confirmation for alleged clandestine clearance, and calculation of duty liability under Section 3 proviso.

2. The appellants argued against the extended period of limitation for the show cause notice, citing lack of justification post-inspection. They acknowledged misdeclaration up to October 2000 but disputed allegations pre-September 1999. The authorities erred in calculating duty liability under Section 3 proviso.

3. The Department countered, stating ongoing investigations post-seizure in 2000, supported by buyer statements up to January 2001. The duty liability breakup spanned different periods, emphasizing the continuation of transactions with buyers post-seizure.

4. The order highlighted the absence of concrete evidence pre-September 1999, despite buyer statements indicating under-valuation since 1999. The Department's case for suppression and misdeclaration justified the extended limitation period, supported by ongoing investigations till February 2001.

5. The application of Section 3 proviso for duty calculation was upheld, citing a precedent by the Larger Bench. The financial hardship argument due to the factory takeover did not absolve the appellants of their revenue liability. However, a partial stay was granted for a specific duty amount pending appeal, with a deadline for compliance.