2009 (7) TMI 246 - AT - Central Excise

Suppression of facts The relevant facts are that the respondent is a manufacturer of cement using clinkers produced in their factory as well as clinkers bought out from the third parties Allegation is that the respondent paid the lower rate duty even in respect of cement manufactured using clinkers bought out from third parties. - Deputy Commissioner issued show cause notice dated 17-2-98 proposing demand of duty without invoking the proviso to Section 11A and the said show cause notice was later withdrawn. On the same set of facts, show cause notice dated 11-5-99 has been issued invoking the proviso to Section 11A. - The party has intimated the manufacture of cement using clinkers produced by them and using clinkers bought out from the third parties. It is not disputed that the party has taken Modvat credit of duty on clinkers purchased from third parties and that the departmental officers have defaced the duty paying documents. It is not disputed that the assessing officers were given RT-12 returns and copies of RG-23 Part II. Under these circumstances, the submission of the learned DR that there was suppression of relevant facts to the authorities by the party is not acceptable. Therefore, the show cause notice in this case could have been issued only invoking the normal period of limitation. As the show cause notice dated 17-2-98 has been withdrawn, the subsequent issue of show cause notice dated 11-5-99 on the same set of facts is clearly not justified. We reject the appeal by the Department.

Issues:
1. Appeal against the order of Commissioner (Appeals) regarding duty demand and penalty imposition.
2. Challenge to the demand of duty by the party in cross-objection.
3. Invocation of normal period of limitation versus extended period under Section 11A.
4. Allegation of suppression of relevant facts by the party to evade duty.

Analysis:
1. The appeal before the Appellate Tribunal CESTAT, New Delhi involved a dispute between the Department and the party regarding duty demand and penalty imposition. The party, a cement manufacturer, used clinkers produced in their factory and bought out clinkers. The Department issued a show cause notice proposing duty demand without invoking the proviso to Section 11A, which was later withdrawn. Subsequently, another notice was issued invoking the proviso to Section 11A. The original authority confirmed the duty demand but set aside the penalty imposed, leading to the Department's appeal seeking restoration of the penalty while the party filed a cross-objection challenging the duty demand.

2. The party contended that since a show cause notice invoking the normal period of limitation had been issued earlier and withdrawn, issuing another notice invoking the extended period under the proviso of Section 11A was unwarranted. The party argued that the appeal by the Department should be rejected on this ground, and the cross-objection should be allowed.

3. The Department, on the other hand, alleged that the party had suppressed relevant facts by choosing to pay duty at a lower rate applicable to cement manufactured using clinkers produced within the factory, even for cement manufactured using bought out clinkers. The Department claimed this amounted to an intent to evade duty. However, the Tribunal noted that the party had disclosed the use of both types of clinkers in their declarations and had taken Modvat credit on clinkers purchased from third parties. The Tribunal found no suppression of facts by the party to justify invoking the extended period of limitation under Section 11A.

4. After considering the submissions from both sides, the Tribunal concluded that the show cause notice issued on the same set of facts invoking the extended period of limitation was not justified, especially after the earlier notice had been withdrawn. Therefore, the Tribunal allowed the party's cross-objection, providing consequential relief as per law, and rejected the Department's appeal.

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