1997 (8) TMI 279 - AT - Central Excise

Summary

Issues: Alleged non-compliance with Central Excise procedures, duty payment for electric motors and cheese winding machines, validity of show cause notices, applicability of excise duty rates, eligibility for small scale concession, imposition of penalty, time-barred demand, quantification of short levy, validity of penalty imposition.

The judgment by the Appellate Tribunal CEGAT, New Delhi involved the case where the appellants were accused of manufacturing and clearing electric motors and cheese winding machines without adhering to Central Excise procedures or paying duty from 11-4-1986 to 31-3-1987. Initially issued a show cause notice by the Superintendent of Central Excise, a revised notice was later issued by the Additional Collector covering the same period. The Additional Collector demanded excise duty at standard rates for goods cleared during 1-4-1986 to 30-6-1986 for cheese winding machines and confirmed differential duty for electric motors and cheese winding machines post the rescission of Notification 46/81.

Regarding the argument presented by the appellants, it was contended that they had filed declarations for both electric motors and cheese winding machines and were previously exempt under Notification 46/81 until covered by an exemption for small scale industries. The appellants emphasized that failure to file a declaration should not negate substantive benefits under the law, citing a relevant case precedent.

The Tribunal noted that the appellants had indeed filed declarations for the relevant products in 1985 and 1986, thereby being eligible for benefits under Notification 46/81 until its rescission. The Additional Collector acknowledged the appellants' eligibility for small scale concession under the previous notification but held that they should have transitioned to the new notification or paid standard rates post-rescission. The Tribunal disagreed with the Additional Collector's stance that procedural irregularities could nullify substantive benefits, citing legal precedents supporting the appellants' entitlement to exemptions.

Furthermore, the Tribunal highlighted that the show cause notice did not encompass charges for electric motors, only focusing on cheese winding machines. It was also noted that the demand for duty was time-barred as it exceeded the statutory six-month period, lacking justification for an extended timeline under Section 11A. The Tribunal deemed the penalty imposed without quantifying the duty as unsustainable, especially considering the absence of suppression, collusion, fraud, or wilful misstatement by the appellants.

Ultimately, the Tribunal set aside the impugned order, allowing the appeal and ruling in favor of the appellants based on the lack of substantiated charges, time limitations on the demand, and the disproportionate penalty imposition without proper quantification.