2004 (8) TMI 199 - AT - Central Excise

Summary

Issues:
1. Demand of differential duty and penalties for the period April 1994 to July 1996 on Air Conditioners and Water Coolers.
2. Allegation of incorrect pricing and wilful suppression of facts by the Appellants.
3. Legality and sustainability of show cause notice.
4. Disclosure requirements of prices sold from depots.
5. Invocation of extended period for incorrect declaration or wilful suppression.
6. Basis of value for goods sold from depots.
7. Imposition of penalty under Section 11AC and Rule 173Q.
8. Applicability of penalty and interest under Section 11AB and Section 11AC.
9. Imposition of penalty under Rule 173Q.

Analysis:
1. The Appellate Tribunal considered the demand of differential duty and penalties imposed on Air Conditioners and Water Coolers for the period April 1994 to July 1996. The impugned order confirmed the duty amounts and penalties imposed by the Commissioner (Appeals) on the Appellants.

2. The issue revolved around the Appellants clearing and selling Air Conditioners and Water Coolers to customers from their branches at rates higher than declared to the department. Allegations of incorrect pricing and wilful suppression of facts were made, leading to the recovery of higher prices on the cleared/transferred goods.

3. Upon examination, it was found that the show cause notice was deemed illegal and not sustainable in law. The Tribunal determined that no duty could be demanded on depot sale prices during the relevant period, rendering the show cause notice baseless.

4. The Appellants were not obligated to disclose prices at which goods were sold from depots post-duty payment. Citing relevant case law, it was established that no incorrect declaration or suppression could be alleged in this scenario, thus barring the invocation of the extended period for the notice.

5. Regarding the basis of value for goods sold from depots, the Tribunal relied on precedents to conclude that no demands could be confirmed in this case. Consequently, the imposition of penalties under Section 11AC and Rule 173Q, along with interest under Section 11AB, was deemed unsustainable.

6. The Tribunal clarified that penalties under Section 11AC and Rule 173Q could not be imposed retrospectively, as these provisions came into effect from 28th September 1996. Therefore, penalties and interest under these sections were set aside, and all imposed penalties were revoked.

7. In light of the above analysis, the impugned order was overturned, and the differential duty elements were deemed refundable as per the law, leading to the allowance of the appeal.