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2004 (12) TMI 200 - AT - Central ExcisePenalty u/s 11AC and Rule 173Q - Demand of duty - Clandestine removal of excisable goods - waste and scrap - Evidence - Limitation period for demands - HELD THAT - It is an admitted fact in this case that the entire amount of duty demanded was paid prior to the issuance of show-cause notice. It has been held in the Apex Court of Rashtriya Ispat Nigam Ltd. 2003 (5) TMI 509 - SC ORDER that, where duty was paid prior to the issuance of show-cause notice, no penalty was liable to be imposed on the assessee u/s 11AC or under Rule 173Q. Therefore, the penalties imposed in this case under the said provisions of law are liable to be vacate. Demand of duty on waste and scrap - We have considered the Tribunal's decision in International Computer Ribbon Corporation v. CCE, Chennai (supra). In that case, as in the instant case, computer print-outs were relied on by the adjudicating authority for recording a finding of clandestine manufacture and clearance of excisable goods. It was found by the Tribunal that the print-outs were neither authenticated nor recovered under Mahazar. It was also found that the assessee in that case had disowned the print-outs and was not even confronted with what was contained therein. The Tribunal rejected the print-outs and the Revenue's finding of clandestine manufacture and clearance. We find a strong parallel between the instant case and the cited case. Nothing contained in the print-outs generated by Sampath Kumar's PC can be admitted into evidence for non-fulfilment of the statutory conditions. It is also noteworthy that the computer print-outs pertained to the period February, 1996 to September, 1998 only but the information contained therein was used for a finding of clandestine removal of waste and scrap for earlier period also, which, in any case, was not permissible in law. In the result, we hold that the entire demand of duty on waste and scrap is liable to be set aside. Demand of duty on original equipments - There is no rebuttal to the assessee's case that the finding that 90% of the OE clearances were replacements is not supported by anything contained in the registers maintained in the Service Station. We do not find sufficient evidence to support the Commissioner's finding that 90%, OE clearances were replacements attracting levy. Limitation - The facts and circumstances of the case would show that they had no intent to evade payment of duty on the components cleared from Unit 1 to Unit 2 inasmuch as any duty paid on the goods cleared from Unit No. 1 would have been available to Unit No. 2 as Modvat credit. The appellants' plea of revenue neutrality raised in this appeal seems to be strong enough to resist the demand of duty on components for the extended period of limitation. Hence the plea of limitation in this case has to be accepted. Thus, we set aside the impugned order and allow this appeal with consequential relief, if any, to the appellants.
Issues Involved:
1. Penalty under Section 11AC and Rule 173Q. 2. Demand of duty on waste and scrap. 3. Demand of duty on components. 4. Demand of duty on finished goods. 5. Limitation period for demands. Summary: Penalty under Section 11AC and Rule 173Q: The Tribunal addressed the penalty issue first, noting that the entire amount of duty had been paid prior to the issuance of the show cause notice. Citing the Tribunal's Larger Bench decision in C.C.E., Delhi v. M/s. Machino Montell (I) Ltd. and the Supreme Court's dismissal of the Revenue's appeal in the case of Rashtriya Ispat Nigam Ltd., it was held that no penalty is imposable u/s 11AC or Rule 173Q when duty is paid before the show cause notice. Consequently, the penalties imposed were vacated. Demand of Duty on Waste and Scrap: The demand of Rs. 56,86,750/- on waste and scrap was based on computer print-outs from a personal computer of a junior officer, Shri G. Sampath Kumar. The Tribunal found that the statutory requirements for admitting a computer print-out as evidence were not fulfilled. The print-outs did not satisfy the conditions u/s 36B of the Central Excise Act, and there was no corroborative evidence of clandestine removal. Therefore, the entire demand was set aside. Demand of Duty on Components: The demand of Rs. 42,66,759/- on components cleared from Unit No. 1 to Unit No. 2 was contested on the basis of limitation. The Tribunal noted that the Commissioner wrongly invoked the extended period of limitation by recording a finding beyond the scope of the show cause notice. The Tribunal accepted the plea of revenue neutrality, as any duty paid by Unit No. 1 would be available as Modvat credit to Unit No. 2, and thus the demand was time-barred. Demand of Duty on Finished Goods: The demand of Rs. 77,79,456/- on finished goods was based on REP invoices, which the Revenue treated as replacements. The Tribunal found that the clearances included both repairs (non-dutiable) and replacements (dutiable). The Commissioner erroneously assumed that 90% of the clearances were replacements based on an uncorroborated statement by Shri Lakshminarasimhan. The Tribunal found insufficient evidence to support this finding and noted that the demand was not properly quantified. The Tribunal accepted the assessee's conceded liability of Rs. 18,74,461/- for replacements but set aside the rest of the demand. Limitation Period for Demands: The Tribunal found that the Commissioner's finding of suppression and misdeclaration was solely based on the assessee's admission of undervaluation, which does not inherently imply intent to evade duty. The Tribunal accepted the plea of revenue neutrality and held that the extended period of limitation was not applicable. Conclusion: The Tribunal set aside the impugned order and allowed the appeal with consequential relief to the appellants.
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