1994 (10) TMI 187 - AT - Central Excise

Summary

Issues:
1. Confirmation of demand under Central Excise Rules, 1944 and imposition of personal penalty.
2. Validity of Show Cause Notice issued and penalty imposed.
3. Statutory empowerment of adjudicating authority for penalty imposition.
4. Time limitation for raising demand for duty evasion.
5. Availability of extended period for demand beyond the normal period.
6. Proof of suppression or fraud for invoking extended period.
7. Barred demand by limitation.
8. Validity of demand on other counts.
9. Penalty for non-maintenance of accounts.
10. Legality of penalty imposed exceeding statutory limit.

Analysis:
1. The appeal challenged the Order-in-Original confirming a demand under Central Excise Rules, 1944, for duty evasion and imposing a personal penalty. The appellants were found to have manufactured and cleared snuff without payment of duty, leading to a demand of Rs. 12,943.33 and a penalty of Rs. 10,000 under specific rules.

2. The appellant argued that a previous Show Cause Notice had been issued and dropped, making the subsequent notice invalid. They also contested the penalty amount exceeding statutory limits and raised concerns about time limitations for duty evasion claims.

3. The adjudicating authority's statutory empowerment for penalty imposition was questioned, with the appellant arguing that the penalty exceeded prescribed limits, indicating non-application of mind.

4. The judgment highlighted the time limitation under Section 11A of the CESA, 1944, for raising demands related to duty evasion. Any demand beyond the specified period was deemed beyond statutory powers.

5. The extended period for demands within a specific timeframe required proof of suppression or fraud. The appellant contended that as the factory was under departmental control, the extended period criteria did not apply without evidence of fraud or suppression.

6. The decision emphasized the need for concrete evidence of suppression or fraud to invoke the extended period for duty evasion claims. The absence of such evidence rendered the extended period unavailable in this case.

7. Ultimately, the entire demand was held as barred by limitation, rendering it unsustainable.

8. Given the limitation issue, the judgment did not delve into the validity of the demand on other grounds.

9. The penalty for non-maintenance of accounts was deemed unsustainable due to a previous dropped notice and the absence of fresh grounds for penalty imposition.

10. The imposition of a penalty exceeding the statutory limit was deemed illegal and indicative of non-application of mind, leading to the order being set aside.

11. Consequently, the order confirming the demand and imposing personal penalties was deemed unsustainable and set aside, with the appeal allowed and consequential relief granted.