2009 (10) TMI 775 - AT - Central Excise

Summary

Issues:
1. Whether the demand made by the appellants is time-barred due to the invocation of the extended period of limitation.
2. Whether the demand for interest is justified and correctly applied under the Central Excise Act.

Issue 1: The appellants contested the demand of Rs. 14,84,656/- and a penalty of Rs. 50,000/- imposed on them, arguing that the demand related to a show-cause notice issued on 22-2-99 for the period November, 1996 to November, 1998 was time-barred. They claimed that the Revenue was aware of the shortages and excess in the stockyard, rendering the suppression allegation unsustainable. The appellants relied on a Circular issued by the Board of Central Excise and Customs on 23rd September, 1999, which prescribed a special procedure for reconciling excess and shortages of iron & steel products. The Tribunal found that the appellants failed to provide evidence of disclosing excess quantities to the jurisdictional Excise Officers, as required by the Circular. As the appellants were availing benefits under the Circular, they were bound by its conditions. Consequently, the Tribunal upheld the demand by invoking the extended period of limitation and imposed the penalty, as per Rule 173Q of the Central Excise Rules, 1944.

Issue 2: Regarding the demand for interest, the appellants argued that the interest was levied without specifying any Section of the Act in the impugned order. They contended that interest should only be payable from 11-5-2001 onwards due to the limitation barring the demand under the show-cause notice dated 22-2-99. The Revenue maintained that interest was leviable as duty was paid after the due dates. The Tribunal noted that the adjudication order did not mention any specific Section of the Central Excise Act for the interest demand. As the appellants did not raise this contention before the adjudicating authority, the Tribunal remanded the issue of interest demand back to the adjudicating authority for reconsideration and a fresh decision after affording an opportunity of hearing to the appellants. The appeal was disposed of accordingly.