2018 (7) TMI 852 - AT - Central Excise

Extended period of limitation - Demand of duty with penalty - captive consumption of fly ash bricks - whether the demand raised for extended period by invoking the proviso to Section 11 A (i) of the Central Excise Act, 1944 is legal and correct or otherwise? - Held that - The appellant failed to declare the production clearances of the goods consumed captively and also not claimed the exemption notification in the ER-1 Return despite there is column in the ER-1 Return for mentioning the exemption notification. Therefore, with this failure, the appellants have suppressed the fact from the department. Accordingly, the extended period for the demand is clearly invokable in the facts of the present case. Penalty u/s 11AC - Held that - The penalty under Section 11AC is also legal and correct in respect of the demand pertaining to the extended period - As regards the penalty imposed for the normal period it cannot be said that the appellants have suppressed any fact for the reason that once a show cause notice was issued in subsequent show cause notice of the same issue, the suppression of the fact cannot be alleged - penalty under Section 11AC cannot be imposed in respect of demand raised in the normal period. Personal penalty imposed on Shri Rakesh Harish Kumar Shah - Held that - He is only an employee of the company in the matter relates to the removal of the goods within the factory for captive consumption. In these facts, it cannot be said that the employee Shri Rakesh Harish Kumar Shah was involved in any malafide Act - penalty set aside. Appeal allowed in part.

Summary

Issues:
1. Demand of excise duty on captive consumption of fly ash bricks.
2. Time-barred demand of excise duty.
3. Imposition of penalty under Section 11AC.
4. Personal penalty imposed on an employee.

Analysis:

Issue 1: Demand of excise duty on captive consumption of fly ash bricks
The appellants were engaged in manufacturing fly ash bricks and cleared them for captive consumption without payment of duty. The department issued show cause notices proposing excise duty demand and penalties. The appellants contested the demand on the grounds of exemption notification and lack of intent to evade duty. The Tribunal found that the appellants failed to disclose their claim of exemption, leading to suppression of facts. The demand for the extended period was deemed legal due to this suppression.

Issue 2: Time-barred demand of excise duty
The appellants argued that the demand for the extended period was time-barred and claimed exemption under Notification No. 67/1995-CE. However, the Tribunal held that the failure to disclose the claim of exemption constituted suppression of facts, justifying the demand for the extended period.

Issue 3: Imposition of penalty under Section 11AC
The Tribunal upheld the penalty under Section 11AC for the demand pertaining to the extended period, as the suppression of facts was evident. However, the penalty for the normal period was set aside since the suppression could not be alleged after the issuance of the first show cause notice. The penalty on the employee was also set aside, considering the lack of malafide intent on the employee's part.

Conclusion:
The Tribunal upheld the demand of excise duty for the entire period, along with the penalty under Section 11AC related to the extended period. The penalty for the normal period was set aside, and the personal penalty on the employee was also revoked. Therefore, the appeals were partly allowed based on the above findings.