1996 (1) TMI 253 - AT - Central Excise

Summary

Issues:
1. Penalty and duty demanded for charging dry batteries at depots.
2. Allegation of suppression of facts by the appellants.
3. Application of Section 11A for demanding duty beyond the normal period.
4. Characterization of dry batteries post-charging.
5. Invocation of longer period of limitation for duty demand.

Analysis:

1. The appeal challenged the penalty and duty imposed on the appellant for charging dry batteries at depots, leading to additional charges recovered beyond the assessable value. The appellant argued that only a small fraction of batteries underwent charging at the depots, and authorities were aware of this practice, as evidenced by approved classification and price lists. The appellant contended that duty was only payable upon clearance from the factory, not for subsequent operations to make goods marketable. The show cause notice for duty beyond six months was contested, alleging no intention to suppress facts.

2. The appellant disputed the allegation of suppressing facts, emphasizing their compliance under the Self Removal Procedure and lack of evidence demonstrating intentional evasion of duty. The lower authority's reliance on the appellant's responsibility to provide information was challenged, asserting no deliberate withholding of information. The absence of evidence supporting the charge of suppression was highlighted, indicating a lack of intention to evade duty.

3. Section 11A was invoked for demanding duty beyond the standard period, premised on the appellant's alleged suppression of facts. The appellant argued against the basis for accusing them of suppression, emphasizing the absence of evidence or intention to evade duty. The Tribunal found insufficient grounds for invoking the longer period of limitation, granting the appellant the benefit of the doubt and ruling in their favor on the limitation issue.

4. The characterization of dry batteries post-charging was debated, with the revenue contending that charging altered the goods' nature, warranting inclusion in the assessable value. The appellant maintained that charging merely made the batteries functional and did not create a distinct category of goods. The Tribunal did not delve into this issue, as the appeal was allowed based on the limitation aspect, refraining from a detailed examination of the case's merits.

5. The Tribunal scrutinized the circumstances, noting the high turnover of the appellant and the minimal percentage of batteries charged at depots. Authorities had assessed and cleared most batteries in a dry state, seemingly satisfied with duty recovery. Absence of evidence indicating intentional evasion or suppression led the Tribunal to rule in favor of the appellant on the limitation issue, granting them relief. The decision emphasized the lack of proof supporting the need for further duty post-clearance, concluding that the benefit of doubt should favor the appellant.