1996 (1) TMI 133 - HC - Central Excise

Summary

Issues:
Quashing of show cause notice under Central Excises and Salt Act, 1944 for contravening provisions of various rules; Allegations of incorrect levy and payment of excise duty; Discrepancies in submission of monthly returns and cost audit reports; Allegations of suppressed production and clearance of Aluminium products; Discrepancy in opening and closing balance; Underestimation of cost of production; Suppression of assessable value of Aluminium Ingots; Limitation period for issuance of show cause notice.

Analysis:
The petitioner, a Company engaged in the manufacture of Aluminium products, sought to quash a show cause notice dated 30-6-1995, calling for explanations on non-payment of Rs. 45,98,05,073.38p. under Section 11A of the Central Excises and Salt Act, 1944, and imposition of penalties for contravening rules. The petitioner contended that the notice demanded irrelevant details beyond the scope of excise duty valuation under Section 4 of the Act, focusing on the normal price of goods cleared. The excise authorities are tasked with determining the correct disclosure of goods cleared and their wholesale price for levy of excise duty.

The impugned notice highlighted discrepancies in the submission of monthly returns and cost audit reports by the petitioner, indicating unaccounted quantities of Aluminium products cleared and exported. The notice alleged under-reporting of production and clearance of Aluminium ingots, suggesting evasion of excise duty. The authorities inferred that the petitioner had clandestinely cleared Aluminium metals without payment of duty, based on discrepancies in opening and closing balance.

The notice also raised issues regarding the underestimation of cost of production and suppression of assessable value of Aluminium products by the petitioner. The court opined that excise authorities are not concerned with the cost of production, as duty is leviable on the wholesale price of cleared goods. However, it allowed investigation into matters preceding the irrelevant aspects raised in the notice.

Regarding the limitation period for issuing the show cause notice, the court clarified that the case was not prima facie barred by limitation, as wilful misstatement and suppression of facts were alleged, extending the limitation to five years. The petitioner was granted an opportunity to respond to the allegations within thirty days for further consideration by the authorities. Failure to reply would result in the vacation of the stay order. The court disposed of the petition with these observations, providing a two-month stay on recovery proceedings.

In conclusion, the judgment addressed the relevant legal issues concerning excise duty valuation, discrepancies in reporting, suppression of production and clearance details, and the applicability of the limitation period for issuing show cause notices in excise matters.