1994 (8) TMI 147 - AT - Central Excise

Summary

Issues involved:
The issues involved in the judgment are whether the demand raised in the case was time-barred, the legality of the penalty imposed, the classification of units as separate legal entities, the alleged suppression of facts by the appellants, and the imposition of penalties under Rule 173Q.

Time-barred demand and legality of penalty:
The appellants argued that the show cause notice issued on the same facts after an earlier notice was dropped was illegal. They contended that all necessary information was disclosed to the Department, and no suppression or misstatement occurred. The appellants cited a Supreme Court judgment to support their stance. They further argued that penalties imposed were illegal due to full disclosures and compliance with central excise formalities. The Collector's finding of suppression lacked reasons, rendering the demand and penalty unsustainable.

Alleged suppression of facts:
The respondent contended that the second show cause notice was valid as new evidence emerged regarding common funding of units. They argued that the units were set up to evade duties, supported by common funding and mutual interests. The Collector found suppression based on incomplete funding details, which the appellants disputed. The respondent relied on a Tribunal decision to support their position.

Classification of units and suppression of facts:
The Collector determined that the units were not separate legal entities and were created to claim duty exemptions. Common operations, funding, and products indicated a lack of independence. The Collector invoked an extended period for recovery due to alleged suppression of mutual interests. The appellants maintained that all central excise formalities were met, and no requirement existed to disclose funding sources. They referenced a relevant court judgment to support their argument.

Conclusion:
The judgment highlighted that the failure to disclose funding sources did not justify invoking an extended period for demand confirmation. Citing a previous court decision, it emphasized that no suppression occurred as the appellants complied with formalities and were not obligated to disclose financial sources. Consequently, the appeals were allowed, and relief granted to the appellants as per the law.