2004 (9) TMI 257 - AT - Central Excise

Show cause notice - Issuance of - Jurisdiction - Demand - Limitation - Suppression - Penalty and interest - Imposition of

Issues Involved:
1. Jurisdiction of the Superintendent to issue show-cause notices.
2. Eligibility for concessional rate of duty under Notifications No. 36/94-C.E. and 5/97-C.E.
3. Invocation of the extended period of limitation under Section 11A(1) of the Central Excise Act.
4. Imposition of penalties under Section 11AC and Rule 173Q.
5. Grant of abatement of duty under Section 4(4)(d)(ii).

Detailed Analysis:

1. Jurisdiction of the Superintendent to Issue Show-Cause Notices:
The assessee contended that the show-cause notices issued by the Superintendent were without jurisdiction as they contained allegations of misdeclaration. The Tribunal held that the Superintendent was competent to issue the show-cause notices as they were issued within the normal period of limitation prescribed under Section 11A(1) of the Central Excise Act. The Tribunal distinguished the cited cases, noting that the allegations in the show-cause notices did not involve fraud or suppression of facts, which would require issuance by the Commissioner.

2. Eligibility for Concessional Rate of Duty:
The assessee claimed the benefit of concessional rate of duty under Notification No. 36/94-C.E. for the period up to 28-2-1997 and under Notification No. 5/97-C.E. for the subsequent period. The Tribunal analyzed the rival entries under these Notifications and concluded that the expression "constituting intermediates and components of prefabricated buildings" and "of a kind used in prefabricated buildings" qualified all the items, including blocks. The Tribunal rejected the assessee's argument that the blocks were per se eligible for concessional duty without fulfilling the conditions specified in the Notifications. The Tribunal relied on its decision in the Excon case to hold that the concrete blocks in question were not eligible for the benefit of concessional rate of duty.

3. Invocation of the Extended Period of Limitation:
The assessee argued that the demand for the period 1994-1995 to 1998-1999 was time-barred as there was no suppression of facts. The Tribunal found that the assessee had disclosed all relevant facts to the department and had raised a reasoned claim for the benefit of Notification No. 36/94-C.E. The Tribunal noted that the department was aware of the assessee's interpretation of the Notification, as evidenced by the correspondence between the assessee and the department. Therefore, the Tribunal held that the extended period of limitation could not be invoked, and the demand for the period 1994-1995 to 1998-1999 was set aside.

4. Imposition of Penalties:
The Tribunal set aside the penalty of Rs. 83,18,399/- imposed under Section 11AC, noting that the demand of duty was not raised under the proviso to Section 11A(1). The Tribunal also set aside the penalty of Rs. 20 lakhs imposed under Rule 173Q, finding no evidence of contravention of Central Excise Rules with intent to evade payment of duty. The Tribunal concluded that the non-payment of duty was due to a bona fide interpretation of the Notifications by the assessee.

5. Grant of Abatement of Duty:
The Revenue's appeal challenged the abatement of duty allowed by the Commissioner under Section 4(4)(d)(ii). The Tribunal upheld the Commissioner's decision, noting that the abatement was in line with the Tribunal's Larger Bench decision in Srichakra Tyres Ltd., which was affirmed by the Supreme Court in Maruti Udyog Ltd.

Conclusion:
The Tribunal modified the Commissioner's order as follows:
1. The demand of duty for the period 1994-1995 to 1998-1999 and the penalties under Section 11AC and Rule 173Q were set aside.
2. The demand of duty for the period from April 1999 to September 2000 was affirmed, but no interest was chargeable under Section 11AB.
3. The Revenue's appeal was rejected.

Appeal No. E/485/2001 of the assessee was disposed of as above, while Appeal No. E/171/2002 of the Revenue was rejected.

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