2011 (7) TMI 914 - AT - Central Excise

Demand - Rule 173Q of the Central Excise Rules - The present proceedings originated from show-cause notice dated 25.7.2002, which was issued by the department to recover differential duty of Rs.9,22,304/- from the assessee for the quarter ending 30.9.1998 as also for imposition of penalty - Held that Where the department did not expect the assessee to disclose information relevant to valuation of the goods under Section 4 of the Act, it cannot be said that any non-disclosure of such information amounted to suppression - Decided in favor of the assessee

Summary

Issues:
1. Demand of duty, interest, and penalties under Central Excise Act for the period from 13.7.1998 to 30.9.1998.
2. Alleged suppression of facts leading to a demand of duty and penalties for the quarter ending 30.9.1998.

Analysis:

Issue 1: Demand of duty, interest, and penalties under Central Excise Act for the period from 13.7.1998 to 30.9.1998:
The appeal was filed against a demand of duty, interest, and penalties under the Central Excise Act for the period from 13.7.1998 to 30.9.1998 related to the manufacturing and marketing of shampoo in sachets. The department's stand on duty liability was inconsistent during this period. Initially, the appellant was directed to pay duty based on MRP under Section 4A of the Act, which they did under protest. Subsequently, the stand changed, and duty was to be paid based on normal value under Section 4. The demand for differential duty was contested by the party, but it was confirmed by the adjudicating authority. However, the Tribunal set aside the order, which was upheld by the Supreme Court. The demand of duty for the period from 10.7.1998 to 30.9.1998 was deemed unsustainable.

Issue 2: Alleged suppression of facts leading to a demand of duty and penalties for the quarter ending 30.9.1998:
The department issued a show-cause notice to recover differential duty for the quarter ending 30.9.1998, alleging suppression of facts by the assessee regarding various elements in determining the assessable value. The notice invoked the extended period of limitation. The original authority confirmed the duty demand and imposed penalties. The appeal against this decision was unsuccessful, leading to the present appeal. The appellant argued against the demand, stating that there was no suppression of facts and that all information was disclosed to the department. The department contended that the demand should be sustained for the period from 1.7.1998 to 12.7.1998 due to alleged suppression. However, the Tribunal found that the department's allegation of suppression was baseless as there was no clear stand on duty liability during that period. Consequently, the demand of duty was deemed unsustainable, and no penalty was imposed on the assessee.

In conclusion, the Tribunal allowed the appeal with consequential relief, holding that the demand of duty for the short period from 1.7.1998 to 12.7.1998 was not sustainable due to the lack of evidence of suppression of facts by the assessee.