2002 (8) TMI 174 - AT - Central Excise

Summary

Issues Involved:
1. Manufacture and clandestine removal of goods.
2. Suppression of facts and extended period for demand.
3. Imposition of penalty u/s 11AC and other rules.
4. Eligibility for Modvat credit and cum-duty price deductions.
5. Claim for benefit of Notification No. 174/87.

Summary:

1. Manufacture and Clandestine Removal of Goods:
The Commissioner confirmed a duty demand of Rs. 52,69,414/- u/r 9(2) of CE Rules based on admissions by the appellant's employees regarding the manufacture and clandestine removal of goods. Confiscation of 398 radiators valued at Rs. 9,71,771/- was ordered, with a redemption fine of Rs. 2.5 lakhs. Penalties were imposed under various rules and u/s 11AC of the Central Excise Act. The Commissioner relied on statements from employees and witnesses to conclude that the appellant manufactured components for T72 cooling systems at M/s. Universal Radiators Ltd. (URL) without proper accounting in Central Excise records.

2. Suppression of Facts and Extended Period for Demand:
The Commissioner found that the appellant suppressed the fact of manufacturing activities at a second premises, intending to evade duty. This justified invoking the extended period u/s 11A(1) of the Central Excise Act. The plea that statements were recorded under duress was rejected.

3. Imposition of Penalty u/s 11AC and Other Rules:
The Commissioner imposed penalties under Rules 9(2), 173Q, 226 of the CE Rules, and u/s 11AC of the Act. However, the Tribunal noted that penalty u/s 11AC was not applicable as the section was promulgated after the period in question, citing the Apex Court judgment in CCE v. Elgi Equipment. The Commissioner was directed to re-adjudicate penalties under the applicable rules.

4. Eligibility for Modvat Credit and Cum-Duty Price Deductions:
The Tribunal acknowledged the appellant's plea for deductions on cum-duty price and eligibility for Modvat credit. The Commissioner was directed to reconsider these aspects, referencing judgments like Srichakra Tyres v. CCE and Formica India Division v. CCE.

5. Claim for Benefit of Notification No. 174/87:
The appellant argued for the benefit of Notification No. 174/87, which was not initially claimed. The Tribunal directed the Commissioner to examine this claim de novo, allowing the appellant to present their case for exemption under the notification.

Conclusion:
The appeals were allowed by remand, directing the Commissioner to re-examine the issues, grant deductions, refix duty and penalty, and consider the applicability of Notification No. 174/87 after giving the appellant an opportunity for a hearing.