1997 (2) TMI 271 - AT - Central Excise

Summary

Issues:
- Confiscation of sensitised paper under Central Excise Rules
- Duty demand and penalty imposed on appellants
- Eligibility for exemption under Notification 175/86-C.E.
- Period for duty demand calculation
- Intent to evade payment of duty and suppression of facts
- Application of extended period of limitation under Section 11A

Confiscation of Sensitised Paper:
The appeal concerns the confiscation of sensitised paper under Chapter Sub-heading 3703.10 of the Central Excise Tariff Act, 1985, by the Additional Collector of Central Excise. The paper was seized on 5-8-1989, and the appellants were given an option to redeem it on payment of a fine and were also levied duty and penalty. The confiscation was based on the grounds of contravention of various Central Excise Rules related to manufacture and storage.

Duty Demand and Exemption Eligibility:
The duty demand of Rs. 2,49,971.38 was imposed on the appellants for the sensitised paper cleared between 7th July, 1988, and 5-8-1989. The appellants were found ineligible for exemption from duty under Notification 175/86-C.E. as their clearances had exceeded the specified limit, and the goods were taken out of the purview of small-scale exemption.

Period for Duty Demand Calculation:
The appellants contested the duty demand, requesting it to be limited to a period of six months before the show cause notice was issued on 16-10-1989. However, the Tribunal rejected this plea and upheld the duty demand for the specified period.

Intent to Evade Payment of Duty and Suppression of Facts:
The Tribunal found that the appellants' claim of clearing goods under a bona fide belief of exemption was not valid. The appellants were engaged in manufacturing and clearing excisable goods since 1986, yet failed to comply with licensing requirements and continued to clear goods without duty payment even after becoming ineligible for exemption. This led to the conclusion that there was an intention to evade payment of duty through the suppression of facts.

Application of Extended Period of Limitation:
The Tribunal upheld the applicability of the extended period of limitation of 5 years under the proviso to Section 11A due to the suppression of manufacture and clearance of excisable goods with the intent to evade duty. Consequently, the impugned order, including the duty demand and penalty, was upheld in its entirety, and the appeal was rejected.