2017 (8) TMI 772 - AT - Central Excise

Time limitation - for the purpose of demand within the normal period in terms of Section 11A(3)(ii)(a) which period will be covered? - penalty - Held that - according to Section 11A(3)(ii)(a) the period would be the six months prior to the date of issue of show cause notice i.e. the date on which the duty is to be paid under this act or the rules made thereunder. In view of this provision, it can be seen that for the purpose of show cause notice the relevant date is due on filing of monthly return - In the present case for the period Nov., 1997 the date of filing of return is 15-12-1997 therefore period November, 1997 also covered in the show cause notice dated 5-6-1998 - respondent is liable to pay duty right from 1st November, 1997 onwards till the date, demand was raised. Penalty - Held that - Shri MK Gandhi had no knowledge that goods is liable for confiscation, for the reason that goods was not in possession of Shri MK Gandhi - penalty set aside. Appeal allowed - decided partly in favor of appellant.

Summary

Issues:
1. Determination of the relevant period for demand under Section 11A(3)(ii)(a).
2. Legality of setting aside penalty on a partner under Section 209A of Central Excise Rules, 1944.

Analysis:
1. The first issue in this case revolves around the determination of the period covered for the purpose of demand under Section 11A(3)(ii)(a). The Appellate Tribunal examined the provisions of Section 11A(3)(ii)(a) which specify that the period for demand is the six months prior to the date of the show cause notice. In this case, a show cause notice was issued on 5-6-1998, and the Tribunal found that the relevant date for the notice is the due date of filing monthly returns. By analyzing the filing date of returns for November 1997, which was 15-12-1997, the Tribunal concluded that the period from 1st November 1997 onwards till the date of demand was raised is covered by the show cause notice. Therefore, the respondent was held liable to pay duty for this entire period.

2. The second issue pertains to the legality of setting aside the penalty imposed on a partner, Shri MK Gandhi, under Section 209A of the Central Excise Rules, 1944. The Tribunal noted that the Commissioner had dropped the penalty on Shri MK Gandhi based on the grounds that he had no knowledge that the goods were liable for confiscation, as he was not in possession of the goods. The Tribunal agreed with the Commissioner's findings that for a penalty under Section 209A to be imposed, the person dealing with the goods must have prior knowledge of their liability for confiscation. As Shri MK Gandhi lacked this knowledge, the Tribunal upheld the decision to waive the penalty on him. Consequently, the Tribunal partially allowed the appeal, affirming the liability of the respondent to pay duty for the specified period and setting aside the penalty on Shri MK Gandhi.

In conclusion, the Appellate Tribunal's judgment clarified the relevant period for demand under Section 11A(3)(ii)(a) and upheld the decision to waive the penalty on a partner due to lack of knowledge regarding the liability of the goods for confiscation.