1984 (11) TMI 332 - AT - Central Excise

Summary

Issues involved: Time-barred show cause notice, Allegations of contravention of Central Excises and Salt Act, 1944, Penalty imposition.

Time-barred show cause notice: The appellants contended that the show cause notice issued after more than one year from the period of demand was beyond the six-month period stipulated u/s 11-A, making it time-barred. They argued that the notice did not extend the period to five years as required by law. The CCE Calcutta passed an order demanding duty and penalty despite the time-barred notice, leading the appellants to file an appeal to the Tribunal.

Allegations of contravention of Central Excises and Salt Act, 1944: The show cause notice alleged that the appellants supplied raw materials for manufacturing component parts without discharging Central Excise duty, contravening provisions of the Act and Rules. The appellants argued that they were not manufacturers of the products and should not be held liable for duty. They emphasized that the job workers were independent units, and the appellants merely supplied raw materials without becoming manufacturers of the finished products.

Penalty imposition: The Department defended the duty demand and penalty imposition, claiming that even without fraud or collusion, the longer time-limit of five years for duty demand was justified. However, the Tribunal found that the show cause notice lacked allegations of intent to evade payment of duty, making the demand time-barred. The appellants' contention that they were not manufacturers in relation to the products processed by job workers was supported by affidavits and previous legal decisions cited during the proceedings.

Conclusion: The Tribunal held that the demand of duty was time-barred and set it aside. The penalty imposition was also deemed unjustified and set aside based on the absence of necessary allegations and proof. The appeal was allowed in favor of the appellants.