1997 (3) TMI 638 - AT - Central Excise

Summary

Issues Involved:

1. Limitation period for raising demand.
2. Alleged suppression of facts and willful misstatement.
3. Applicability of penalty under Rule 173Q(1)(d).
4. Availment of modvat credit and duty-free clearances.

Issue-wise Detailed Analysis:

1. Limitation Period for Raising Demand:

The appellants contested that the show cause notice issued on 30.4.1993 for the period 1988-89 to 26.11.1991 was beyond the permissible six-month period. They argued there was no suppression or willful misstatement to justify the extended period of five years. The Tribunal found merit in this argument, noting that the facts were known to the department since the beginning, as the appellants had been submitting classification lists and RT-12 returns regularly. The Tribunal concluded that the entire demand was time-barred and not sustainable in law.

2. Alleged Suppression of Facts and Willful Misstatement:

The department alleged that the appellants suppressed material information and did not comply with statutory formalities, intending to evade duty. However, the Tribunal observed that the appellants had been transparent about their operations, including the existence of two units and their respective clearances. The Tribunal held that there was no suppression or willful misstatement, as the appellants had been furnishing all necessary information to the department.

3. Applicability of Penalty under Rule 173Q(1)(d):

The Tribunal was divided on the issue of imposing a penalty. The Member (Technical) suggested reducing the penalty to Rs. 50,000, acknowledging that the appellants should have considered the aggregate value of clearances for determining the rate of duty. However, the Member (Judicial) argued that no penalty should be imposed since there was no suppression, mis-declaration, or willful misstatement. The Member (Judicial) cited several Supreme Court judgments, emphasizing that penalty requires an intent to evade duty, which was not established in this case. The majority opinion favored the Member (Judicial), concluding that no penalty was warranted.

4. Availment of Modvat Credit and Duty-Free Clearances:

The appellants argued that availing modvat credit by one unit did not preclude duty-free clearances by another unit, provided the conditions of the exemption notification were met. They cited various Tribunal decisions supporting the simultaneous availment of modvat credit and SSI exemption for different goods. The Tribunal did not explicitly address this issue in the final judgment but implicitly accepted the appellants' argument by ruling the demand time-barred and not sustainable.

Majority Order:

The Tribunal's majority order concluded that the demands raised were barred by time and that no penalty was imposable. As a result, the appeal was allowed, and the impugned order was modified accordingly.