2002 (1) TMI 1293 - AT - Central Excise

Summary

Issues:
- Barred by limitation - Six months period for show cause notice
- Declaration filed by the appellants in April 1997 and April 1998
- Duty liability of the appellants
- Financial hardship plea by the appellants

Barred by Limitation - Six Months Period for Show Cause Notice:
The appellants, engaged in manufacturing brass rods, were issued a show cause notice on 11-9-98 for duty demand from October 1997 to June 1998. The consultant for the appellants argued that the notice was time-barred as it exceeded the six-month limitation period. He cited declarations filed in April 1997 and April 1998, indicating the Revenue's awareness of the exemption availed by the appellants. The Revenue contended that the exemption was withdrawn in October 1997, making the April 1997 declaration irrelevant. The Revenue argued that the notice fell within the six-month limit from the last declaration in April 1998. The Tribunal held that the duty liability was undisputed, but the limitation issue favored the Revenue. Ignorance of law was not a valid defense, and the appellants were obligated to pay duty post-exemption withdrawal. Despite the lack of a prima facie case, considering the appellants' financial hardship plea, the Tribunal directed a deposit of Rs. 1,25,000 within eight weeks, waiving the balance duty and penalty pending appeal.

Declaration Filed by the Appellants in April 1997 and April 1998:
The declarations submitted by the appellants in April 1997 and April 1998 played a crucial role in the dispute. The consultant argued that these declarations indicated the Revenue's knowledge of the appellants availing the exemption. However, the Tribunal found the April 1997 declaration irrelevant due to the subsequent withdrawal of the exemption in October 1997. The April 1998 declaration was considered effective only from that date onwards, covering the period within six months of the show cause notice issuance. Despite the appellants' claim of ignorance regarding the exemption withdrawal, the Tribunal emphasized that adherence to legal obligations was paramount, and the declarations did not support their case effectively.

Duty Liability of the Appellants:
The primary issue revolved around the duty liability of the appellants concerning the manufacture and clearance of brass rods post-exemption withdrawal. Both parties acknowledged the duty obligation, shifting the focus to the limitation aspect. While the duty liability was not contested, the Tribunal's decision primarily hinged on the limitation period for issuing the show cause notice rather than disputing the duty itself. The Tribunal emphasized the importance of complying with duty obligations despite changes in exemption status and the appellants' duty to pay post-withdrawal.

Financial Hardship Plea by the Appellants:
In addition to the legal aspects, the appellants raised a plea of financial hardship, stating their factory's closure since 1999. Despite the lack of concrete evidence supporting this claim, the Tribunal considered the overall circumstances. While acknowledging the financial plea, the Tribunal balanced it with the duty obligations, directing a partial deposit to proceed with the appeal. The appellants' financial situation was a factor in the Tribunal's decision to grant a waiver on the balance duty and penalty, contingent on the specified deposit within the stipulated timeframe.