2005 (3) TMI 238 - AT - Central Excise

Summary

Issues:
1. Demand of duty on furniture items without following Central Excise procedure and without payment of duty.
2. Imposition of penalties under various sections of the Central Excise Act and Rules.
3. Grant of abatement of duty from sale price in determining the assessable value of goods.
4. Non-imposition of penalty under Section 11AC for the period prior to 28-9-1996.

Issue 1: Demand of Duty on Furniture Items
The Farwood Industries were alleged to have manufactured and supplied furniture without following Central Excise procedure and without payment of duty. The Department issued a show-cause notice invoking the extended period of limitation due to alleged suppression of facts. The company contended that the items were exempt from duty under a specific notification and should be treated as "handicrafts." The adjudicating authority rejected their contentions and confirmed the demand of Basic and Special Excise Duty along with penalties. The Tribunal upheld the Commissioner's decision, stating that the items did not qualify as 'handicrafts' based on the test laid down by the Supreme Court. The Tribunal agreed that the demand of duty was justified due to suppression of facts by the assessee.

Issue 2: Imposition of Penalties
Penalties were imposed on the company and its Managing Director under various sections of the Central Excise Act and Rules. The company contested the penalties, arguing against the demand of duty and challenging the penalties imposed. The Tribunal upheld the penalties imposed under Section 11AC and Rule 173Q, stating that they were justifiable due to the proven fact of manufacturing and clearing excisable goods without following Central Excise procedure and without payment of duty. However, the penalty on the Managing Director under Rule 209A was vacated as there was no finding that the goods were liable to confiscation.

Issue 3: Grant of Abatement of Duty
The Department filed an appeal against the grant of abatement of duty from the sale price in determining the assessable value of goods. The Tribunal upheld the Commissioner's decision to treat the sale price as cum-duty price and allow the benefit of abatement of duty from the sale price, in accordance with Section 4(4)(d)(ii) and supported by the Supreme Court's judgment in a relevant case.

Issue 4: Non-Imposition of Penalty under Section 11AC
The company challenged the non-imposition of penalty under Section 11AC for the period prior to 28-9-1996. The Tribunal held that no penalty could be imposed for any period before the said provision of law came into force, as established by the Supreme Court's decision in a relevant case. The Tribunal dismissed the Revenue's appeal, stating it lacked merit.

This detailed analysis of the judgment covers the issues involved comprehensively, outlining the arguments presented by both sides and the Tribunal's reasoning for each issue.