1997 (7) TMI 173 - HC - Central Excise

Summary

Issues involved:
1. Central Excise duty demand under Section 11A of the Central Excises and Salt Act, 1944 for the period from 1-10-1983 to 25-7-1985.
2. Imposition of penalty of Rs. 3 lakhs under Rule 173Q of the Central Excise Rules, 1944.

Central Excise Duty Demand Issue:
The petitioner, engaged in manufacturing scientific instruments, received a demand notice under Section 11A of the Central Excises and Salt Act, 1944 amounting to Rs. 3,21,198.90 for the specified period. The petitioner contested the notice, claiming no misrepresentation or suppression of facts and contending that the demand was time-barred. The Tribunal upheld the petitioner's objection, ruling in their favor on 22-9-1995.

Penalty Imposition Issue:
In addition to the demand notice, the Department issued a notice under Rule 173Q for imposing a penalty of Rs. 3 lakhs. Although the Tribunal canceled the demand notice as time-barred, it still required the petitioner to pay the penalty amount. The petitioner argued that no demand can be pursued without a valid demand notice, citing a Supreme Court decision where it was held that the question of penalty arises only if the demand is sustained under the initial notice. Consequently, the High Court set aside the Tribunal's order imposing the penalty, while allowing the other part of the order to remain in effect. No costs were awarded in this judgment.