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2005 (3) TMI 359 - AT - Central Excise
Issues: Duty demand under extended period due to mis-statement and suppression of facts, applicability of Proviso to Section 11A, justification of duty demand, legality of penalty and interest
In this judgment by the Appellate Tribunal CESTAT, New Delhi, the issue revolved around a duty demand of approximately Rs. 8.5 lakhs for the period August 1995 to September 1996, confirmed by invoking the extended period as available under the Proviso to Section 11A of the Central Excise Rules. The contention raised was that there was no mis-statement or suppression of facts attracting the Proviso, thus requiring the demand and the penalty to be vacated. The learned SDR argued that the short levy occurred due to mis-statement and suppression of facts by the appellants, highlighting a declaration under Rule 173B made by the appellants on April 1, 1996, stating "Exempted because Pharmacopoeia item," and pointing out the absence of declarations for three newly manufactured items. The Tribunal found justification in the Revenue's contention, emphasizing that the exemption claimed by the appellants was based on a specific statement that the medicines in question were pharmacopoeia items, which was later discovered to be incorrect. While an incorrect statement would typically be deemed irresponsible, obtaining exemption through a factually incorrect statement led to the appellants' conduct being considered a mis-statement of fact, a circumstance mentioned in the Proviso to Section 11A. Consequently, the Tribunal upheld the duty demand and the penalty, as the mis-statement of fact warranted no interference. However, the claim for interest was deemed illegal since the duty demand predated the introduction of the section related to interest. The judgment, delivered by the Member (T), concluded by confirming the duty demand and penalty while rejecting the claim for interest, highlighting the significance of accurate declarations and the consequences of mis-statement of facts in excise matters.
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