1991 (10) TMI 170 - AT - Central Excise

Summary

Issues Involved: Bar of limitation, non-speaking order, shortage in stock, demand for duty, penalty imposition, Rule 223A vs. Section 11A of the Central Excise Act, de novo adjudication.

Issue-wise Detailed Analysis:

1. Bar of Limitation:
The appellants argued that the notice for duty was hit by the bar of limitation, as the shortage had been recorded since 1976 and was dealt with in earlier proceedings. The Deputy Collector did not consider the plea of time bar, and the Collector (Appeals) upheld this irregular order. The Tribunal cited the decision in Himachal Steel Kandrori v. Collector of Central Excise, stating that an order set aside by the appellate authority with specific directions limits the lower authority's jurisdiction. The Tribunal found that the demand for the majority of the shortage (37.868 Metric Tonnes) was time-barred under Section 11A, as the shortage was known to the department since 1976.

2. Non-Speaking Order:
The first Order-in-Appeal by the Collector (Appeals) found the initial adjudication order non-speaking, as it did not address the appellants' submissions regarding the shortage. The remand order directed the adjudicating authority to verify records and provide clear observations. However, the de novo order again failed to address specific contentions, such as the production on 9-1-1986 and the natural causes for the shortage, rendering it non-speaking.

3. Shortage in Stock:
The shortage of 37.868 Metric Tonnes was detected in 1976, and the appellants regularly recorded this in their statements. The Deputy Collector confirmed the duty demand, stating the appellants did not provide conclusive proof of the stock's fate. The Tribunal noted that the shortage was known to the department, and the demand raised in 1986 was unjustified and time-barred.

4. Demand for Duty:
The Deputy Collector confirmed the duty demand and imposed a penalty, which the Collector (Appeals) partially set aside. The Tribunal found that the demand for the major portion of the shortage was time-barred. The duty demand for the remaining 2.825 Metric Tonnes needed further examination, as the de novo order did not address the appellants' explanations for this shortage.

5. Penalty Imposition:
The Deputy Collector imposed a penalty of Rs. 1000/-, which was set aside by the Collector (Appeals). The Tribunal did not address the penalty further, as the appeal was allowed on the grounds of the time-barred demand.

6. Rule 223A vs. Section 11A of the Central Excise Act:
The Tribunal held that the provisions of Section 11A for recovery of short-levied duty are mandatory and override Rule 223A. The demand for the shortage detected in 1976 was time-barred under Section 11A, as the notice was issued in 1986, beyond the permissible period.

De Novo Adjudication:
The Tribunal found that the de novo adjudication order did not exceed the scope of the remand but was non-speaking and failed to address specific contentions. The matter was remanded for de novo adjudication on the limited question of the alleged shortage of 2.825 Metric Tonnes.

Conclusion:
The appeal was partially allowed, setting aside the Order-in-Appeal concerning the major portion of the shortage (37.868 Metric Tonnes) as time-barred. The matter was remanded for de novo adjudication regarding the remaining shortage of 2.825 Metric Tonnes. The appellants were entitled to reliefs for the duty and cess deposited before their first appeal hearing.