1992 (8) TMI 204 - AT - Central Excise

Summary

Issues Involved:
1. Duty liability on limestone during the period from 20th March 1990 to 16th September 1990.
2. Allegation of deliberate evasion of duty and applicability of the extended time limit under Section 11A(1) of the Central Excises & Salt Act.
3. Liability and reasonableness of the penalty imposed under Rule 173Q.

Detailed Analysis:

1. Duty Liability on Limestone:

The primary issue was whether limestone became liable to duty after Notification 448/86-C.E., dated 30th November 1986, exempting limestone from duty, was rescinded on 20th March 1990 by Notification 86/90-C.E., until it was once again exempted by Notification 143/90-CE, dated 17th September 1990. The appellants argued that "limestone" was covered by the exemption available to "lime" under Notification 16/90-C.E., dated 20th March 1990. However, the Tribunal noted that the chemical composition of limestone (Calcium Carbonate) and lime (Calcium Oxide) were different, and thus, the exemption for lime did not extend to limestone. The Tribunal observed that the necessity to issue Notification 143/90 on 17th September 1990, specifically exempting limestone, indicated that limestone was not intended to be covered under the earlier exemption for lime. Consequently, the Tribunal concluded that limestone was dutiable during the intervening period from 20th March 1990 to 16th September 1990, and the duty was correctly demanded under Section 11A and Rule 9(2).

2. Allegation of Deliberate Evasion of Duty:

The second issue was whether the appellants deliberately evaded duty, justifying the extended time limit under the proviso to Section 11A(1) of the Act. The appellants contended that they maintained truthful accounts of limestone used as raw material in Form IV Account and thus, there was no suppression of facts. However, the Tribunal noted that the appellants did not file any classification list for limestone and failed to obtain a Central Excise license for the crushed limestone manufactured and consumed within their factory. The Tribunal referenced the Supreme Court's judgment in the case of Jaishri Engineering Co. (P) Ltd. v. Collector of Central Excise, which emphasized that mere inaction or failure was insufficient to invoke the extended period; there must be a positive act of suppression or misstatement. The Tribunal found that the appellants' failure to declare their activities and obtain the necessary license constituted suppression of facts with intent to evade duty, thereby justifying the extended time limit for duty recovery.

3. Liability and Reasonableness of Penalty:

The third issue was whether the appellants were liable to a penalty under Rule 173Q and whether the penalty of Rs. 3 lakhs was reasonable. The Tribunal agreed with the Collector's finding that the appellants' actions amounted to suppression of facts, thereby justifying the imposition of a penalty. However, considering the facts and circumstances, the Tribunal deemed the penalty of Rs. 3 lakhs to be excessive and reduced it to Rs. 1 lakh.

Conclusion:

The Tribunal concluded that limestone was dutiable during the period from 20th March 1990 to 16th September 1990, and the duty was recoverable under Rule 9(2) read with Section 11A. The appeal was rejected, but the penalty was reduced from Rs. 3 lakhs to Rs. 1 lakh. The Tribunal also addressed a typographical error in the date of the impugned order, concluding that it did not affect the merits of the case. The cross objections filed by the respondent-Collector were disposed of in terms of the Tribunal's order.