1996 (11) TMI 166 - AT - Central Excise

Summary

Issues:
Demand of duty for the period 4-8-1988 to 27-3-1989; Invocation of longer period of limitation without allegation of suppression or intention to evade payment of duty; Appellants not reflecting production in RT 12 returns; Eligibility for benefit of Notification No. 175/86; Validity of SSI Certificate for exemption; Allegations of evasion of duty; Appellants collecting duty from customers while showing Nil duty payment.

Analysis:
The appeal before the Appellate Tribunal CEGAT, MADRAS involved the demand of duty amounting to Rs. 4,03,469.14 for the period between 4-8-1988 to 27-3-1989. The learned Consultant for the appellants argued that the show cause notice was issued beyond the time, and the longer period of limitation should not have been invoked without any allegation of suppression or intention to evade payment of duty. He contended that the appellants obtained a Small Scale Industries (SSI) certificate post the period in question, dated March 1990, with the commencement of production from 1-3-1988. However, the consultant failed to provide the date of application for the SSI certificate, raising doubts about its validity.

The Department's representative argued that the appellants were clearing goods to customers without notifying the authorities of their manufacturing activities, collecting Central Excise duty from customers while reporting Nil duty payment and production in RT 12 returns. The Department contended that the appellants' actions indicated an intention to evade duty payment, especially when collecting duty from customers. The Department justified the invocation of the longer period of limitation based on these circumstances.

Upon considering both arguments, the Tribunal observed that the appellants failed to disclose their production in the RT 12 returns, despite filing them with the Department. The appellants claimed eligibility for the benefit of Notification No. 175/86 but did not show clearances of goods at Nil duty rate, indicating a deliberate attempt to conceal their production. The Tribunal found the appellants' actions to be mala fide, as they collected duty from customers without clarifying their duty obligations, leading to the rightful invocation of the longer period of limitation.

Regarding the eligibility for Notification No. 175/86, the Tribunal noted that the appellants did not possess the SSI Certificate at the relevant time, necessary for the exemption. The certificate produced post the period in question lacked clarity on its validity for the prior period, leading to the conclusion that it was valid only from the date of issue. The Tribunal emphasized that without a clear indication in the certificate, the validity should be from the date of issue, thereby denying the appellants the benefit of the SSI exemption during the period in question. Consequently, the appeal was dismissed, finding no merit in the appellant's arguments.