2007 (6) TMI 93 - AT - Central Excise

Demand and penalty Alleged that appellant made suppression of fact of production and accordingly invoked larger period of limitation After considering the detail larger period of limitation was set aside and matter remanded back to original authority

Summary

Issues:
1. Confirmation of demands and penalty for manufacturing brass sheets without payment of duty.
2. Availability of larger period for department to issue show cause notice.
3. Allegation of suppression of facts by the appellant.
4. Re-quantification of duty and penalty by the Original Authority.

Analysis:
1. The appeal before the Appellate Tribunal arose from an Order-in-Appeal confirming demands and imposing penalties on the appellants for manufacturing brass sheets without paying duty from July 1998 to November 2001. The Superintendent of Central Excise had issued letters to the appellants in 1999 and 2000 to clear the goods on payment of duty, but the revenue did not proceed to issue a show cause notice or stop clearances. The Tribunal noted that the department was aware of the production and clearances, and there was no suppression of facts. The Tribunal set aside the demands for the larger period and confirmed demands for the normal period. The penalties were to be re-quantified by the Original Authority after re-quantifying the duty within four months.

2. The learned JDR defended the order by arguing that the appellants should have cleared the goods on payment of duty despite the Superintendent's instructions. The JDR contended that the failure to do so amounted to suppression of facts. However, the Tribunal disagreed with this argument, stating that the department should have taken action to stop clearances or seize goods instead of merely issuing letters. The Tribunal held that there was no suppression of facts, and the larger period was not applicable in this case.

3. The Tribunal emphasized that the department's awareness of production and clearances meant that the larger period for demands was not invokable. The penalties imposed were equal to the confirmed amounts, along with interest under specific sections of the Central Excise Rules. The Tribunal directed the Original Authority to re-quantify the duty and penalties within a specified timeframe. The appeal was disposed of by setting aside demands for the larger period, confirming demands for the normal period, and instructing the authority to re-quantify penalties in accordance with the law.

4. In conclusion, the Tribunal's decision focused on the lack of suppression of facts by the appellants, the department's awareness of the manufacturing activities, and the need for re-quantification of duty and penalties by the Original Authority. The judgment clarified the application of the larger period for demands, the penalties imposed, and the procedural steps to be taken for re-quantification.