1998 (6) TMI 188 - AT - Central Excise

Summary

Issues:
1. Confirmation of duty and penalty against two appellants.
2. Invocation of larger period for duty recovery.
3. Controversy regarding excisability of the product.
4. Imposition of penalty based on conflicting judgments.
5. Bona fide belief of the appellants and suppression by the department.
6. Consideration of larger period and penalty imposition.

Confirmation of Duty and Penalty:
The appeal involved the confirmation of duty and penalties against two appellants under Rule 9(2) and Rule 173 and Rule 209A, respectively, of the Central Excises and Salt Act, 1944. The duty demand of Rs. 53,349/- was confirmed, with M/s. Duraiappa Lime Products facing a penalty of Rs. 15,000/- and M/s. Thangam Industries a penalty of Rs. 5,000/-.

Invocation of Larger Period:
The issue of invoking a larger period for duty recovery was raised based on the appellants' engagement in manufacturing lime powder. The department initiated proceedings by issuing a show cause notice, citing the need for a larger period due to the nature of the product falling under the Central Excise Tariff Act, 1985.

Controversy Regarding Excisability:
The appellants did not contest the merits of the case, citing numerous judgments against them. They argued that the appeals were time-barred and penalty should not be levied due to conflicting judgments on the excisability of the product. They relied on legal precedents to support their contention.

Imposition of Penalty Based on Conflicting Judgments:
The appellants claimed that penalties should not be imposed due to their bona fide belief arising from conflicting court and tribunal decisions on the excisability of the product. They referenced specific cases where penalties were not considered valid under similar circumstances.

Bona Fide Belief and Suppression:
The appellants argued that their actions were based on a bona fide belief, and penalties should not be imposed in cases where there was a genuine confusion regarding excisability. The department contended that there was suppression, but the appellants highlighted instances where their intentions were made clear during the proceedings.

Consideration of Larger Period and Penalty Imposition:
After thorough examination of legal precedents and arguments, the Tribunal concluded that the appellants were entitled to the benefit of doubt regarding the excisability of the product. The larger period for duty recovery was deemed inapplicable, and penalties were not justified based on the conflicting judgments and the appellants' lack of intention to evade duty.

Conclusion:
The Tribunal ruled in favor of the appellants, setting aside the demands raised for the extended period and dismissing the penalties. The appeals were disposed of accordingly, emphasizing the significance of bona fide belief, conflicting judgments, and the lack of intention to evade duty in the final decision.