2002 (12) TMI 118 - AT - Central Excise

Issues Involved:
1. Demand of duty and penalty on M/s. Freezair India (P) Ltd.
2. Personal penalties on Shri Kuldeep Singh Punn and Shri Narender Singh Punn.
3. Excise liability of indoor unit/air cooling unit.
4. Claim for abatement of duty from invoice price.
5. Entitlement to SSI exemption for the year 1997-98.
6. Invocation of the extended period of limitation under Section 11A(1).
7. Validity of statements recorded under Section 14 of the Central Excise Act.
8. Liability of M/s. Freezair for the period prior to 1-4-98.
9. Imposition of interest under Section 11AB.
10. Validity of penalty under Section 11AC read with Rule 173Q.
11. Validity of personal penalties under Rule 209A.

Detailed Analysis:

1. Demand of duty and penalty on M/s. Freezair India (P) Ltd.:
The Commissioner confirmed a demand of duty amounting to Rs. 45,62,325/- against M/s. Freezair India (P) Ltd. under Rule 9(2) read with the proviso to Section 11A(1). Additionally, a penalty of an equal amount was imposed under Section 11AC read with Rule 173Q. The Tribunal upheld the liability of M/s. Freezair to pay duty for the period 1996-97 to 1998-99, finding that they clandestinely manufactured and cleared excisable goods without payment of duty and without following prescribed procedures.

2. Personal penalties on Shri Kuldeep Singh Punn and Shri Narender Singh Punn:
The Tribunal set aside the personal penalties of Rs. 3 lakhs and Rs. 2 lakhs imposed on Shri Kuldeep Singh Punn and Shri Narender Singh Punn respectively under Rule 209A. It was noted that there was no finding by the Commissioner that the Punn brothers were in possession of excisable goods or had dealt with such goods with the knowledge that they were liable to confiscation.

3. Excise liability of indoor unit/air cooling unit:
M/s. Freezair filed an application to raise a contention that the indoor unit/air cooling unit meant for split air-conditioner was not excisable, but this application was dismissed as it was not pressed during the final hearing.

4. Claim for abatement of duty from invoice price:
M/s. Freezair sought to introduce additional grounds for abatement of the duty element from the invoice price of the goods. The Tribunal allowed this application and directed the Commissioner to consider the claim for abatement in terms of Section 4(4)(d)(ii) of the Central Excise Act and the decision of the Tribunal's Larger Bench in Srichakra Tyres Ltd. v. CCE.

5. Entitlement to SSI exemption for the year 1997-98:
M/s. Freezair claimed that their value of clearance was below Rs. 50 lakhs during the year 1997-98, entitling them to SSI exemption. The Tribunal directed the Commissioner to examine this claim and re-quantify the duty accordingly.

6. Invocation of the extended period of limitation under Section 11A(1):
The Tribunal upheld the invocation of the extended period of limitation under Section 11A(1), noting that M/s. Freezair had wilfully suppressed the manufacture and clearance of goods with intent to evade payment of duty.

7. Validity of statements recorded under Section 14 of the Central Excise Act:
The Tribunal found that the statements given by Shri Kuldeep Singh Punn and others under Section 14 were consistent and not retracted, thus supporting the Department's case. The appellants' claim of being pressurized to give the statements was not accepted.

8. Liability of M/s. Freezair for the period prior to 1-4-98:
The Tribunal held that M/s. Freezair, as the successor-in-interest to the proprietory concern of Shri Kuldeep Singh Punn, inherited the liability to be assessed and pay duty for the period prior to 1-4-98.

9. Imposition of interest under Section 11AB:
The Tribunal upheld the demand for interest under Section 11AB but clarified that such demand could not be raised for the period prior to 28-9-96, as Section 11AB came into force only on that date.

10. Validity of penalty under Section 11AC read with Rule 173Q:
The Tribunal set aside the penalty of Rs. 45,62,325/- imposed under Section 11AC read with Rule 173Q, noting that these provisions are independent and cannot be read together. The Commissioner was directed to decide afresh on the question of penalties under these provisions.

11. Validity of personal penalties under Rule 209A:
The Tribunal set aside the personal penalties imposed on the Punn brothers under Rule 209A, as there was no finding that they dealt with excisable goods with the knowledge that they were liable to confiscation.

Conclusion:
The Tribunal upheld the demand of duty against M/s. Freezair for the period 1996-97 to 1998-99 and directed the Commissioner to re-quantify the duty after considering the claims for abatement and SSI exemption. The penalties imposed under Section 11AC read with Rule 173Q and the personal penalties under Rule 209A were set aside, with directions for fresh consideration by the Commissioner. The demand for interest under Section 11AB was upheld, subject to clarification for the period prior to 28-9-96.

← Previous Next →