2009 (11) TMI 772 - AT - Central Excise

Summary

Issues:
1. Calculation of excise duty on transferred parts between two factories
2. Show cause notice for demand of differential duty, interest, and penalty
3. Appeal against duty demand, interest, and penalties imposed under different rules
4. Extended period invocation and penalty under Section 11AC challenged in appeal

Analysis:
1. The case involved the calculation of excise duty on parts transferred between two factories. The appellant transferred parts of a "latch locking system" from Plant I to Plant II, leading to a dispute regarding the duty payment. The Department claimed duty should have been paid on the cost of production plus profit margin or 115% of the cost of production for different periods.

2. A show cause notice was issued for demand of differential duty, interest, and penalty under Section 11AC, alleging willful misstatement and suppression of facts to evade duty payment. The Assistant Commissioner confirmed the duty demand, interest, and imposed penalties under various rules, leading to an appeal.

3. The appeal challenged the duty demand, interest, and penalties imposed under different rules. The Commissioner (Appeals) upheld the duty demand, interest, and penalty under Section 11AC but set aside penalties imposed under specific rules. The appeal further contested the invoking of the extended period and imposition of penalty under Section 11AC.

4. The Tribunal analyzed the submissions and records, concluding that the Department could only recover duty for the normal limitation period. The Tribunal found no basis for invoking the extended period under the proviso to Section 11A(1) or imposing penalties under Section 11AC. Citing relevant Supreme Court judgments, the Tribunal emphasized that suppression requires deliberate intent to evade duty, which was not evident in this case. As none of the criteria for invoking the extended period were met, the duty demand was upheld only for the normal limitation period, and the duty demand beyond that period and the penalty under Section 11AC were set aside. The appeal was partly allowed.