1997 (2) TMI 211 - AT - Central Excise

Summary

Issues:
1. Allegation of showing lesser prices in gate passes but selling at higher prices.
2. Contention regarding diversion of goods.
3. Application of limitation period under Section 11A of the Central Excise Act, 1944.
4. Suppression of information regarding diversion of consignments.

Analysis:

The appeal before the Appellate Tribunal CEGAT, New Delhi was against an order-in-original passed by the Collector of Central Excise, Baroda, dated 12-5-1988. The appellant, engaged in the manufacture of chemicals, faced an allegation that they showed lesser prices in gate passes but actually sold goods at higher prices during a specific period. The appellant argued that these discrepancies were due to the diversion of goods from original consignees to other buyers at different prices, either due to storage issues or other factors. The Collector rejected this defense and confirmed the demand for differential duty based on the higher prices. The appellant relied on a Tribunal decision in a similar case but was held that the facts were different. The Tribunal clarified that duty is payable based on the price at which the consignment is ultimately delivered, whether to the original buyer or a different one at a higher price. The Tribunal found no merit in the appellant's case on the issue of diversion of goods.

Regarding the limitation period under Section 11A of the Central Excise Act, 1944, the appellant argued that the show cause notice issued in 1986 for the period from 1981 to 1985 was barred by limitation. The appellant contended that if the proviso to Section 11A applied, the entire claim would be within time. The Tribunal noted that the appellant's reply to the show cause notice did not clarify whether invoices showing higher prices were submitted along with the monthly returns. The Tribunal highlighted that if invoices with higher prices were not submitted, it could constitute suppression of information. The Tribunal emphasized the need for careful scrutiny by the adjudicating authority on this aspect.

The Tribunal set aside the impugned order and remanded the case for a fresh decision on the limitation issue. The adjudicating authority was directed to consider the limitation question in accordance with the law and observations in the order, providing the appellant with a personal hearing. The Tribunal clarified that the liability on merits was not open for reconsideration. Ultimately, the appeal was allowed, granting relief to the appellant.