1998 (5) TMI 159 - AT - Central Excise

Summary

Issues Involved:
1. Provisional Assessment and Demand of Duty
2. Confirmation of Demand for Differential Duty on Perma Towers
3. Allegation of Clandestine Removal and Under-valuation
4. Deductions on Account of Excise Duty and Freight
5. Imposition of Penalty

Issue-wise Detailed Analysis:

1. Provisional Assessment and Demand of Duty:
The appellants argued that the demand was provisional when the impugned order was passed, as acknowledged by the Commissioner. They had filed a price-list and a Classification List and executed a B-13 Bond with a Bank Guarantee under Rule 9B. The demand was thus premature and should be set aside, supported by judgments from the Bombay High Court and Calcutta High Court. However, the respondent countered that the demand was due to clandestine removal and under-valuation, and even provisional assessments do not preclude demands if suppression or fraud is involved, as per the Delhi High Court's judgment in Duncans Agro Industries v. Union of India.

The Tribunal agreed with the respondent, stating that the appellants' mis-statements and suppression of facts took the case out of the purview of Rule 173CC. Thus, the demand was justified despite the provisional status of the assessment.

2. Confirmation of Demand for Differential Duty on Perma Towers:
The demand of Rs. 1,841.76 for two perma towers was set aside as it was based on under-valuation, an issue not raised in the show cause notice, which only alleged clandestine removal. The Tribunal found that the impugned order had overstepped the scope of the notice.

3. Allegation of Clandestine Removal and Under-valuation:
For the demand of Rs. 1,21,534.76 on 194 perma towers, the appellants had deducted various expenses from the printed prices in their price-list, which was not challenged during the hearing. The Tribunal noted that while the appellants engaged in mal-practices, legally admissible deductions (Excise duty and freight) should not be denied. The authorities were directed to re-quantify the demand after allowing these deductions.

In the case of Rs. 82,986.16 for 33 perma towers, the appellants claimed these were manufactured by another unit, M/s. Unifab Engineers. However, the Tribunal upheld the Commissioner's finding that M/s. Unifab was a dummy unit of the appellant firm, a conclusion supported by a previous CEGAT decision. The Tribunal rejected the appellants' argument that the earlier decision applied only to a different period, stating that once a unit is deemed a dummy, it continues to be so unless circumstances change. The demand was confirmed but required re-quantification for admissible deductions.

4. Deductions on Account of Excise Duty and Freight:
The Tribunal allowed deductions for Excise duty and freight for the differential duty demands on 194 and 33 perma towers. The authorities were instructed to re-quantify the demands accordingly.

5. Imposition of Penalty:
The appellants contended that the penalty of Rs. 1.00 lakh was excessive. Considering the total demand of Rs. 2.08 lakhs, which would decrease upon re-quantification, the Tribunal reduced the penalty to Rs. 50,000.00.

Conclusion:
The appeal was disposed of by setting aside the demand of Rs. 1,841.76, directing re-quantification of demands for 194 and 33 perma towers after allowing deductions, confirming the demand of Rs. 1,972.80, and reducing the penalty to Rs. 50,000.00.