2000 (9) TMI 171 - AT - Customs

Summary

Issues Involved:
1. Timeliness of the show cause notices.
2. Eligibility for exemption under Notification No. 175/86-C.E.
3. Justification of confiscation of goods and imposition of penalty.

Issue-wise Detailed Analysis:

1. Timeliness of the Show Cause Notices:
The appellants argued that the show cause notices were served beyond the statutory period of six months, making the demand for duty time-barred. The notices dated 23-11-1990 were served on 9-1-1991. The Department countered that the notices were sent by registered post within the six-month period. The Tribunal noted that under Section 37C of the Central Excises and Salt Act, 1944 (CESA), service of notice is deemed to occur on the date of delivery, not the date of sending. Therefore, since the notices were delivered beyond the six-month period, the demand was time-barred.

2. Eligibility for Exemption under Notification No. 175/86-C.E.:
The appellants claimed entitlement to exemption from duty under Notification No. 175/86-C.E. without SSI registration, based on their clearance values for the relevant years. The Department argued that without SSI registration and the necessary Central Excise licence, the appellants were not eligible for the exemption. The Tribunal found that the appellants were not entitled to the exemption as they did not have the required SSI registration and had not complied with other statutory formalities.

3. Justification of Confiscation of Goods and Imposition of Penalty:
The goods seized from the truck were accompanied by invoices dated a day earlier than the removal date, leading to suspicion of a second consignment. The Tribunal noted that the Department could not prove that the goods were not covered by the invoices or that they were a second consignment. Consequently, the confiscation under Rule 173Q was not justified. Similarly, for the goods seized from the factory, there was no evidence of clandestine removal, which is necessary for confiscation under Rule 173Q. However, non-accountal of goods and non-maintenance of statutory records were proven, justifying a penalty under Rule 226.

Conclusion:
The Tribunal allowed appeal No. E/5442/92-B, setting aside the demand of duty, confiscation, and penalties. In appeal No. E/5437/92-B, the Tribunal set aside the confiscation and penalties except for a penalty of Rs. 500/- under Rule 226 of the Central Excise Rules.