2009 (9) TMI 339 - AT - Central Excise

Limitation- The appellant challenge the order passed by the Commissioner (Appeals) Meerut whereby the lower appellate authority has set aside the order passed by the original authority, Meerut. The Joint Commissioner vide his order had confirmed the demand against the respondents to the tune of Rs.13,91,486/- under proviso to Section 11A of the Central Excise Act, 1944 along with the interest thereon in terms of Section 11AB of the said Act and had also imposed equal amount of penalty under Section 11AC of the said Act read with Rule 25 of the Central Excise Rules, 2002. The Joint Commissioner had granted credence to the Modvat credit amounting to Rs.8,26,264/- while deciding the actual duty liability of the respondent. Held that- It is really painful to note that an amount to the extent of about Rs.6 lakhs and odd as duty besides interest and penalty for the period 1998-99 to 2001-02 was allowed to go down the drain either by sheer gross negligence and/or connivance on the part of the excise authorities with the concerned party. In such circumstances, we do not find any case having been made out by the Department for interference in the impugned order. Revenue appeal dismissed.

Summary

The appellate tribunal CESTAT, New Delhi, consisting of Justice R.M.S. Khandeparkar and Shri M. Veeraiyan, heard the appeal of an appellant challenging an order passed by the Commissioner (Appeals) Meerut. The appellant contested a demand for Rs.13,91,486 under the Central Excise Act, 1944, along with interest and penalty. The original authority confirmed the demand, but the lower appellate authority set it aside due to the demand being barred by the law of limitation. The lower appellate authority found no suppression of facts to warrant an extended period of limitation. The respondents were manufacturing a product classified under a different category than declared, leading to the duty liability. The lower appellate authority concluded that the department had knowledge of the actual product being manufactured, rendering the claim for duty and penalty time-barred. The learned DR argued that there was mis-declaration under Rule 173B, justifying the duty and penalty. However, both authorities found mis-description by the respondents, which was unchallenged. The central issue was the limitation for demanding duty and imposing penalties. The lower appellate authority found that the department was aware of the misclassification, leading to the dismissal of the appeal. The tribunal criticized the department for negligence or connivance, allowing the revenue loss. Consequently, the tribunal dismissed the appeal, finding no grounds for interference with the Commissioner (Appeals) order.