2012 (8) TMI 849 - AT - Central Excise

Demand of differential duty - Bar of limitation - Held that - The raw materials supplied by M/s Telco were received by the appellant under Rule 57F(3) challans which clearly indicated that the raw materials had been cleared for job work under the said Rule. The appellant accordingly followed the job work procedure by manufacturing the intended product by making use of raw materials supplied by M/s Telco as well as inputs procured by the appellant themselves, and supplying the product to M/s Telco on payment of duty. The invoice issued in connection with the clearance of the job worked goods clearly indicated the amount of duty paid by the appellant on the cost of their own inputs plus job work charges including margin of profit. The job-worked goods were, in turn, used by M/s Telco in the manufacture of excisable products which were cleared on payment of appropriate duty - formidable case found for the appellant on the ground of limitation. There is no evidence of the appellant having suppressed material facts with intent to evade payment of appropriate duty of excise on the job-worked goods - Decided in favour of assessee.

Summary

Issues: Appeal against demand of differential duty and penalty; Invocation of extended period of limitation under Section 11A(1) of Central Excise Act; Suppression of facts with intent to evade payment of duty.

Analysis:
1. Demand of Differential Duty and Penalty: The appeal was filed against a demand of differential duty and connected penalty concerning goods manufactured by the appellant as a job worker for M/s Telco Ltd. and supplied to them from June 1995 to March 1998. The impugned demand was based on the cost of raw materials supplied by M/s Telco, which had not been included in the duty calculation for the job-worked goods. The show-cause notice invoked the extended period of limitation under Section 11A(1) of the Central Excise Act, alleging suppression of facts to evade duty payment. Both the original and appellate authorities ruled against the assessee on merits and limitation.

2. Limitation Issue: The appellant emphasized the limitation aspect in the appeal, arguing that they had not suppressed any material facts to evade duty payment. The appellant received raw materials from M/s Telco under Rule 57F(3) challans, indicating clearance for job work. They followed the job work procedure by using raw materials from M/s Telco and inputs procured by themselves, paying duty on the product supplied to M/s Telco. The appellant contended that they did not withhold any information to evade duty, citing the Tribunal's decision in M.Tex & Anr. vs. The Commissioner of Central Excise, Jaipur. They also referenced the case of M/s Padmini Products vs. Commissioner of Central Excise to support their argument.

3. Judgment: Upon reviewing the grounds of the appeal, the Tribunal found a strong case for the appellant on the limitation issue. There was no evidence of the appellant intentionally suppressing facts to evade duty payment on the job-worked goods. Consequently, the Tribunal held that the entire duty demand was time-barred, leading to the allowance of the appeal solely on the ground of limitation. The judgment was pronounced and dictated in open court by the Tribunal.

This detailed analysis of the judgment highlights the key issues involved, the arguments presented by the appellant, and the Tribunal's decision based on the limitation aspect, ultimately allowing the appeal on that specific ground.