1993 (5) TMI 100 - AT - Central Excise

Issues Involved:
1. Demand of Central Excise duty for the period 1-4-1983 to 31-3-1986.
2. Demand of Central Excise duty for the period 1-4-1986 to 30-6-1987.
3. Imposition of penalty.
4. Allegations of suppression of facts.
5. Validity of extended period of limitation.
6. Eligibility for Small Scale Industry (SSI) exemption.
7. Proper valuation of excisable goods.

Detailed Analysis:

1. Demand of Central Excise Duty for the Period 1-4-1983 to 31-3-1986:
The appellants, M/s. Debes Industries, were alleged to have manufactured and cleared goods under Tariff Item No. 68 valued at Rs. 53,76,946.19 without obtaining a Central Excise license and without payment of Central Excise duty amounting to Rs. 5,72,538.10. The appellants admitted that they had not filed the prescribed declaration for the years 1983-84 and 1984-85. The Tribunal upheld the Collector's finding that the appellants had manufactured and cleared excisable goods without obtaining a Central Excise license during this period.

2. Demand of Central Excise Duty for the Period 1-4-1986 to 30-6-1987:
The appellants availed a concessional rate of duty under Notification No. 175/86-C.E., dated 1-3-1986, which was not admissible, resulting in duty evasion of Rs. 3,06,106.35. The Tribunal confirmed the Collector's finding that the appellants had suppressed material facts to avail the concessional rate of duty and thereby evaded central excise duty.

3. Imposition of Penalty:
The Tribunal confirmed the imposition of penalty on the appellants, rejecting their contention that no penalty was leviable. The Tribunal held that the appellants had manufactured and cleared goods without obtaining a Central Excise license and without payment of duty, justifying the imposition of penalty.

4. Allegations of Suppression of Facts:
The appellants contended that they had informed the Department about their status as a division of Malhati Tea and Industries Ltd. through various communications, including a declaration dated 4-4-1985 sent under Certificate of Posting. However, the Tribunal found that there was no presumption that the declaration was received by the Department. The Tribunal upheld the Collector's finding of suppression of facts, noting that the appellants had knowingly suppressed information regarding the clearances from other factories owned by Malhati Tea and Industries Ltd.

5. Validity of Extended Period of Limitation:
The Tribunal examined whether the extended period of limitation invoked by the Collector for confirming the demand was legally sustainable. The Tribunal held that the invocation of the extended period was justified, as the appellants had suppressed facts and evaded duty. The Tribunal cited the case of R.G. Nagori and Sons v. CCE, which held that even if there is no specific allegation of fraud or suppression of facts in the show cause notice, the extended period of 5 years for raising the demand would be justified if such allegations are otherwise spelled out at length in the show cause notice.

6. Eligibility for Small Scale Industry (SSI) Exemption:
The appellants claimed that they were eligible for SSI exemption under various notifications. However, the Tribunal found that the appellants were not eligible for SSI exemption, as the aggregate value of clearances from all factories of Malhati Tea and Industries Ltd. exceeded the prescribed limits. The Tribunal rejected the appellants' contention that they entertained a bona fide belief that they were eligible for SSI exemption.

7. Proper Valuation of Excisable Goods:
The appellants contended that the Collector failed to determine the value of clearances in terms of Section 4 of the Central Excises and Salt Act, 1944, and that the turnover value included transportation costs, packing costs, taxes, and other charges that should not be included in the assessable value. The Tribunal remanded the matter to the Collector to re-hear the issue of valuation of excisable goods cleared during the relevant period and determine the duty recoverable and the penalty to be imposed accordingly.

Conclusion:
The Tribunal confirmed the findings of the Collector regarding the demand of duty and imposition of penalty. However, the matter was remanded to the Collector for re-determination of the value of excisable goods cleared during the relevant period in accordance with Section 4 of the Central Excises and Salt Act, 1944. The appellants were to be granted a personal hearing before the final decision.

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