1993 (6) TMI 151 - AT - Central Excise

Summary

Issues:
1. Whether the demand of duty and penalty imposed on the appellants is justified.
2. Whether the demand is barred by limitation.
3. Whether there was suppression of facts or wilful misstatement by the appellants.

Analysis:
1. The appeal challenged the order confirming the demand of duty and penalty imposed by the Additional Collector of Central Excise. The appellants had taken Modvat Credit on steel products received from S.A.I.L. based on delivery challans. The Department alleged that duty had been paid on these products before 31-1-1986, making the appellants ineligible for Modvat Credit as per Rule 57H(2). A show cause notice was issued, and after a personal hearing, the impugned order was passed.

2. The appellants contended that the demand was barred by limitation as there was no suppression of facts or wilful misstatement. The Department argued that the duty on inputs was paid before 31-1-1986, and this fact was not disclosed by the appellants when availing Modvat Credit. The Department claimed that the longer time-limit applied due to suppression by the appellants.

3. The Tribunal found that duty on the inputs was indeed paid before 31-1-1986, rendering the appellants ineligible for Modvat Credit. However, it noted that the show cause notice was issued beyond the six-month period. The appellants had provided duty paying documents and delivery challans, which were scrutinized by the Department before granting Modvat Credit. There was no allegation of suppression or wilful misstatement by the Department. The Tribunal held that there was no suppression of material facts or wilful misstatement by the appellants. As such, the demand was deemed barred by limitation, and the order confirming the duty demand and penalty was set aside. The appeal was allowed based on these findings.