2002 (5) TMI 126 - AT - Central Excise

Summary

Issues:
1. Challenge to duty demand and penalty imposition on a partnership firm and its partners.
2. Appeal against the Tribunal's decision affirming the duty demand and penalty on the firm.
3. High Court challenge based on the extended period of limitation.
4. Question of limitation raised before the appellate tribunal.
5. Allegations of fraud, collusion, misstatement, and suppression of facts by the excise department.
6. Determination of whether duty evasion was intentional.

Issue 1: Challenge to Duty Demand and Penalty:
The appellant, a partnership firm with two units, faced duty demand and penalty after a raid revealed discrepancies in the units. The Commissioner upheld the demand and penalties against the firm and its partners, which was appealed. The Tribunal set aside the decision against the partners and M/s. Bata India Ltd. but affirmed it against the firm.

Issue 2: Tribunal's Decision Appeal:
The firm challenged the Tribunal's decision in the High Court, arguing against the extended period of limitation due to lack of evidence of suppression. The High Court set aside the order and remitted the matter to the Tribunal for a fresh decision.

Issue 3: High Court Challenge on Limitation:
The main argument raised was the time-barring of the demand from 12-8-91 to 31-3-94, as the show cause notice was served on 18-7-96. The appellant contended that there was no suppression of facts to evade duty, especially as no duty was charged from M/s. Bata India Ltd., to whom the footwear was supplied.

Issue 4: Question of Limitation:
The appellant's counsel focused on the limitation period, arguing that the excise department was aware of the activities and no suppression occurred. The Departmental Representative supported the Tribunal's order.

Issue 5: Allegations of Fraud and Suppression:
The central issue revolved around whether duty evasion occurred due to fraud, collusion, or suppression of facts. The show cause notice alleged collusion to evade duty by misrepresenting the units' operations, but no evidence of collusion between the appellant and M/s. Bata India Ltd. was found.

Issue 6: Determining Intent to Evade Duty:
The Tribunal found no basis for holding the appellant had prior knowledge or reason to believe the goods were liable for confiscation, leading to the penalty on M/s. Bata India Ltd. being set aside. As the appellant did not charge duty from M/s. Bata India Ltd., the intention to evade duty was questioned, ultimately leading to the duty demand being barred by limitation.

In conclusion, the Tribunal's decision against the appellant firm was set aside due to the lack of evidence supporting fraud or collusion to evade duty. The appeal was allowed, providing consequential relief as permissible by law.