2010 (12) TMI 476 - AT - Central Excise

Demand - Time barred - Since, there has been a suppression regarding the production in excess of the small scale exemption limit, and there has also been non-payment of duty on such clearances during the relevant financial year, and since the show cause notice has been issued within the prescribed longer period of five years applicable in such cases - Consequently, the demand of interest and imposition of equal penalty under Section 11AC of the Act are also justified - Since the law provides no scope for leniency, no such leniency can be shown to the appellants - Accordingly, the appeal is dismissed

Summary

Issues:
1. Whether the demand of duty is time-barred due to delayed issuance of the show cause notice.
2. Whether the appellants suppressed information regarding crossing the exemption limit and non-payment of duty.
3. Whether interest and penalties are justifiable in the given circumstances.

Analysis:
1. The appellants, engaged in manufacturing various products, crossed the small scale exemption limit in 1998-99 and 1999-2000 but claimed it was a bona fide mistake with no suppression. They voluntarily informed the authorities in May 2000 after realizing the oversight. The show cause notice, however, was issued on 8-1-03, leading to the argument that the demand is time-barred. The Tribunal noted the statutory five-year limit for duty demand from the relevant date and found the notice issued within this period, though delayed. The appellants' readiness to pay duty initially was also considered. Thus, the demand was held legal and proper, not time-barred.

2. The department contended that the appellants did not inform about crossing the exemption limits or pay the duty. The department learned about the non-payment during a visit in May 2000. The Tribunal observed that while the appellants belatedly disclosed the oversight, they were obligated to inform the department promptly upon exceeding the exemption limit and pay the duty. The suppression of information and non-payment of duty on excess production were established. The statutory provision allowed a five-year period for duty demand from the relevant date, justifying the demand and penalties.

3. The Tribunal acknowledged the appellants' delayed disclosure but noted the mandatory penalty provision under Section 11AC, leaving no room for leniency. Despite the appellants' eventual disclosure, the law did not permit differentiation between them and those not coming forward. The imposition of interest and penalties was deemed justified under the circumstances. The Tribunal dismissed the appeal, emphasizing the statutory provisions' strict application despite the appellants' belated disclosure.

In conclusion, the Tribunal upheld the duty demand, interest, and penalties, citing the suppression of information, non-payment of duty, and the statutory provisions mandating penalties without leniency for delayed disclosures.