1997 (11) TMI 219 - AT - Central Excise

Summary

Issues:
Challenge to order demanding duty and imposing penalty based on alleged suppression and evasion of duty.

Analysis:
The appellant contested an order from the Additional Collector of Central Excise demanding duty and imposing a penalty. The appellant, engaged in manufacturing excisable goods, argued that they had given a declaration for exemption from licensing requirements, including details of goods manufactured. They did not include the value of free supply material from customers, believing they were within the duty exemption limit. Central Excise Officers visited in 1986, but a show cause notice alleging suppression and duty evasion was issued in 1989. The appellant argued that the notice was time-barred, citing Tribunal decisions setting a 6-month limit from the department's knowledge of the offense. The appellant relied on previous High Court judgments regarding job work activities and assessable value. The Supreme Court's decision in Ujagar Prints clarified that material cost should be included. The appellant's bona fide belief, based on past judgments, was deemed plausible, leading to the notice being considered time-barred. The appeal was successful, and the order was set aside.

Conclusion:
The main issue in this case was the challenge against an order demanding duty and imposing a penalty on the appellant for alleged suppression and evasion of duty. The appellant argued that their exclusion of the value of free supply material was based on a bona fide belief, supported by past judgments, that job charges alone constituted the assessable value. The Tribunal found the notice to be time-barred due to the delay in issuance after the department's knowledge of the offense. The appellant's plea was accepted, and the order was set aside, granting them the benefit of doubt.