2007 (10) TMI 193 - AT - Central Excise

Positive averment in the classification declaration that they were manufacturing MS pipes both of their own brand as well as bearing brand name of other persons was deliberately false they were mfg. only their own brand name & misdeclaration was resorted to for the purpose of wrongfully availing benefit of exemption under SSI not. l/93 - willful evasion of duty demand not time barred - penalty u/s 11AC cannot be imposed when the period of dispute is prior to introduction of Sec. 11AC

Summary

Issues:
1. Classification of M.S. Pipes for excise duty purposes.
2. Allegations of misdeclaration and fraudulent practices by the assessee.
3. Limitation period for demand of duty.
4. Imposition of penalty under Section 11AC of the Central Excise Act, 1944.

Analysis:

Classification of M.S. Pipes: The case involved the classification of M.S. Pipes for excise duty purposes. The respondents were found to have bifurcated their pipes into two categories - market/buyer brand pipes and own brand/unbranded pipes. They cleared pipes under different classifications to avail benefits under the SSI notification. The issue arose when the value of clearances exceeded the exemption limit, leading to a demand for duty payment.

Misdeclaration and Fraudulent Practices: The department alleged that the respondents willfully misdeclared their pipes as market/buyer brand pipes without specifying the actual brand names, leading to underpayment of duty. The Commissioner (Appeals) accepted the contention that the demand was barred by limitation, but the appellate tribunal found that the respondents had made false declarations to fraudulently avail themselves of duty exemptions. The misdeclaration and fraudulent practices led to the setting aside of the limitation defense.

Limitation Period for Demand: The Commissioner (Appeals) held that the demand was barred by limitation due to the respondents' regular submission of returns and declarations. However, the appellate tribunal disagreed, citing willful evasion of duty through false declarations as a reason to set aside the limitation defense and allow the demand for duty payment.

Imposition of Penalty: The penalty imposed under Section 11AC of the Central Excise Act, 1944 was a point of contention. The appellate tribunal upheld the setting aside of the penalty, citing a recent Supreme Court decision that penalties under Section 11AC cannot be imposed for periods before its introduction in the statute book. Therefore, the penalty was not applicable for the disputed period of 1995-96.

In conclusion, the appellate tribunal partly allowed the appeal by upholding the demand for duty payment but setting aside the penalty imposed under Section 11AC due to its inapplicability for the relevant period.