2008 (7) TMI 52 - SC - Central Excise

Allegation that respondents had been evading duty on cigarettes consciously & deliberately manufacturing deceptively similar version of certain regular brand showing lower sale price as compared with that of the regular brand allegation that appellant is receiving difference between the two S.P. by means of flow back - Tribunal has not recorded any finding regarding the flow back finding recorded by the Tribunal on the question of limitation is also not satisfactory matter remanded

Summary

Issues: Duty demands and penalties related to cigarettes manufactured by job worker manufacturers on behalf of a company.

The judgment pertains to duty demands and penalties in the context of cigarettes manufactured by job worker manufacturers on behalf of a company. The period under consideration is from 1-4-1983 to 31-1-1986, during which excise duty was leviable based on the sale price declared on cigarette packets. The respondents were accused of consciously evading central excise duty by manufacturing deceptively similar versions of certain brands with lower sale prices while selling them at the same price as the regular brand, thereby collecting the price difference as "flow back."

Searches were conducted on 21-1-1986 at the premises of the company and its job workers, leading to show cause notices being issued to the company and various job workers. The Collector of Central Excise confirmed duty demands and penalties, citing evidence of flow back to the company. However, the Tribunal, without considering the flow back finding, ruled in favor of the respondents based on a previous case involving a different company. The Supreme Court criticized the Tribunal for not addressing the flow back allegations and the Collector's findings, expressing dissatisfaction with the Tribunal's order and its handling of the limitation issue.

The Supreme Court set aside the Tribunal's order and remanded the matter for fresh consideration, emphasizing the need for detailed findings on flow back and limitation. The Court instructed the Tribunal to provide a separate finding on the liability of the company compared to the job workers. Despite not expressing an opinion on the dispute's merits, the Court urged the Tribunal to expedite the decision within six months due to the case's age and prolonged litigation. The appeals were disposed of with no order on costs, leaving all contentions open for further consideration.