2004 (2) TMI 165 - AT - Central Excise

Summary

Issues Involved:
1. Challenge against duty demand, interest, and penalty imposed by the Commissioner of Central Excise, Hyderabad.
2. Submission on limitation regarding the issuance of show cause notice under Section 11A.
3. Dispute related to payment of duty on goods transferred for captive consumption.
4. Allegation of suppression of facts by the appellant.
5. Provisional assessments and finalization by jurisdictional authorities.
6. Expert disagreement on the assessable value of goods.
7. Premature and misconceived show cause notice.
8. Availability of Modvat credit for duty paid on captively consumed goods.

Analysis:
1. The appeal before the Appellate Tribunal CESTAT, Bangalore was against the order-in-original passed by the Commissioner of Central Excise, Hyderabad, involving duty demand exceeding Rs. 63 lakhs, interest, and penalty. The appellants contested the demand on both merit and limitation grounds.

2. The primary submission on limitation revolved around the issuance of the show cause notice under Section 11A dated 15-12-1998 for the period December 95 to February 97. The appellants argued that the invocation of the proviso to Section 11A was unjustified, especially considering ongoing provisional assessments for the relevant period.

3. The dispute centered on the duty payment for goods transferred from one factory to other factories for captive consumption. The appellant's counsel emphasized that the differential duty demand arose from a cost audit by Central Excise authorities, not from any deliberate concealment of facts. The assessable value was determined based on the cost of production, certified by a Chartered Accountant, with no material consumption or pricing information suppressed.

4. The Tribunal examined the records and concurred with the appellants' limitation argument. It was noted that the disagreement on assessable values between experts in costing did not amount to suppression of facts. Furthermore, as most assessments were provisional and later finalized, the premature show cause notice was deemed misconceived.

5. The Tribunal concluded that the duty demand in the show cause notice was time-barred, allowing the appeal on this ground and setting aside the impugned order. The appellant was granted entitlement to any consequential relief. Additionally, the availability of Modvat credit for duty paid on captively consumed goods was highlighted as a factor against the allegation of evasion.