1987 (3) TMI 334 - AT - Central Excise

Summary

Issues:
1. Competence of the Board to consider revision under Section 35A
2. Legality of the demand for differential Central Excise duty
3. Time-barred nature of the demand
4. Justification of penalty under Rule 173Q
5. Imposition of penalty

Analysis:

1. The issue of the competence of the Board to consider a revision under Section 35A was raised during the hearing. Initially, the department's representative argued against the Board's competency. However, it was clarified that the Board had the authority to entertain the revision application of the appellants under Section 35A. As a result, the department did not press for the preliminary objection, and the proceedings continued under Section 36 before the Tribunal.

2. The demand for a differential Central Excise duty of Rs. 5,07,668.95 was made by the Collector on the grounds of mis-declaration of the value of steel drums fabricated by the appellants for a specific corporation. The appellants contended that the demand was time-barred. The Tribunal examined the issue and found merit in the plea of time-bar, setting aside the demand due to its issuance after the expiry of the one-year time limit provided under Rule 10 for demands of duties short-levied.

3. Regarding the imposition of a penalty under Rule 173Q, the department argued that the penalty was justified based on the appellants' knowledge of using imported steel sheets without filing revised price lists. However, the Tribunal noted that there was no evidence to suggest that the appellants were aware of the price difference between imported and indigenous steel. Moreover, the burden of paying Central Excise duty rested with the customer, not the appellants. The Tribunal found no justification for the heavy penalty imposed and set it aside.

4. The Tribunal concluded that the appellants, being fabricators with a fixed fabrication charge per drum, had no incentive to evade duty payments, especially considering that the duty liability lay with the customer. The Tribunal observed that there was no evidence of mala fides on the part of the appellants or the customer, both of which were government undertakings. Consequently, the penalty imposed under Rule 173Q was deemed unjustified, and the appeal was allowed in full, providing consequential relief to the appellants.