2007 (12) TMI 89 - AT - Central Excise

Job worker - Demand of duty on lubricant & coolant repacked from bulk to smaller packs & cleared to IOCL W.e.f. 1-3-1997 activity of repacking came to be deemed manufacture, hence excisable & SSI unit, were not required to get registered before that period assessee was informed of such amendments only in July, 1998 when the Excise officers visited their premises SCN issued on 26-2-02 based on material gathered before 3 years back i.e. on July 98, not justified demand is time barred

Summary

Issues:
1. Duty demand on repacked oils cleared to M/s. Indian Oil Corporation Ltd.
2. Invocation of extended period of limitation under Section 11A(1) of the Central Excise Act.
3. Quantification of duty amount and challenge against it.
4. Allegation of suppression and invocation of extended period of limitation.
5. Penalty imposition on the appellant.

Issue 1:
The appeal concerns a demand of duty on lubricant and coolant repacked from bulk to smaller packs and cleared to M/s. Indian Oil Corporation Ltd. as a job work. The appellants continued to clear the repacked oils without payment of duty, leading to a show-cause notice invoking the extended period of limitation under Section 11A(1) of the Central Excise Act.

Issue 2:
The quantification of duty amount was contested by the appellants, who had already paid a certain sum voluntarily before the show-cause notice was issued. The appellants argued that the demand of differential duty was time-barred due to the delayed issuance of the notice, challenging any allegation of suppression against them.

Issue 3:
The duty liability was conceded by the assessee to a certain extent, while the differential duty amount was contested based on the limitation period. The appellants, as a Small Scale Industry unit, were unaware of the changes in law until informed by Central Excise officers in July 1998, after which they voluntarily paid the admitted duty liability.

Issue 4:
The Tribunal considered the timeline of events and the knowledge of the appellants regarding their duty liability. Relying on legal precedents such as the Nizam Sugar Factory case and the Bripanil Synthetics case, the Tribunal found that the demand of duty raised after a significant delay from the officers' visit to the factory could not be sustained, as no suppression could be alleged against the appellants.

Issue 5:
In light of the above analysis, the Tribunal set aside the demand of duty as time-barred and vacated the penalty imposed on the appellants, considering that the admitted duty liability was discharged before the issuance of the show-cause notice. The impugned order was thus set aside to the extent challenged, and the appeal was allowed.