1990 (12) TMI 251 - AT - Central Excise

Summary

Issues Involved:
1. Suppression of facts and extended time limit under Section 11A of the Central Excise Act.
2. Validity of the addendum issued by the Superintendent instead of the Collector.
3. Applicability of exemption notifications (77/83 and 77/85) and the requirement for a license.
4. Penalty imposed under Rule 9(2) and Rule 173Q of the Central Excise Rules.

Detailed Analysis:

1. Suppression of Facts and Extended Time Limit under Section 11A:

The appellants were accused of not disclosing their manufacturing activities related to Item 68 goods, which led to the invocation of the extended time limit under Section 11A of the Central Excise Act. The appellants argued that they maintained all records and did not deliberately suppress facts. However, the judgment noted that despite maintaining records, the appellants failed to declare their manufacturing activities to the Central Excise authorities and resisted taking a license even after being urged by the authorities. The court upheld that the appellants' failure to declare their activities amounted to suppression of facts, justifying the extended time limit for duty demand.

2. Validity of the Addendum Issued by the Superintendent:

The appellants contended that the addendum issued on 6-1-1986 by the Superintendent to quantify the duty for the period 1-4-1985 to 30-11-1985 was invalid as it should have been issued by the Collector per the amended Section 11A. The court held that the original demand notice issued by the Superintendent before the amendment was valid and the addendum merely communicated the quantum of duty, not constituting a fresh notice. Therefore, the addendum was not invalidated by the amendment.

3. Applicability of Exemption Notifications (77/83 and 77/85) and Requirement for a License:

The appellants claimed they were under the mistaken impression that they were exempted from taking a license due to the exemption for Small Scale Industries. The court found that the appellants were aware of the notification requirements and their obligations but chose not to declare their manufacturing activities or seek clarification from the authorities. The court noted that the appellants' understanding of the exemption limit was not a valid excuse for non-compliance with the licensing requirements, and their actions amounted to a non-bona fide act.

4. Penalty Imposed under Rule 9(2) and Rule 173Q:

The lower authority imposed penalties of Rs. 2,000 under Rule 9(2) and Rs. 50,000 under Rule 173Q. The court found the penalty under Rule 9(2) to be appropriate given the circumstances. However, considering the quantum of duty involved, the court reduced the penalty under Rule 173Q to Rs. 25,000, deeming it sufficient to serve the ends of justice.

Conclusion:

The judgment upheld the demand for duty based on the extended time limit due to suppression of facts, validated the addendum issued by the Superintendent, and confirmed the non-applicability of the claimed exemption due to non-compliance with licensing requirements. The penalty under Rule 173Q was reduced to Rs. 25,000, while the penalty under Rule 9(2) was deemed appropriate. The appeal was dismissed with the modification of the penalty amount.