1998 (8) TMI 262 - AT - Central Excise

Summary

Issues:
1. Duty demand confirmation under proviso to Section 11A of the Central Excise & Salt Act.
2. Imposition of penalty.
3. Allegations of undervaluation and misdeclaration.
4. Allegations of suppression of facts.
5. Time-barred demands.
6. Related party transactions.
7. Invocation of proviso to Section 11A after closing the matter for orders.
8. Addendum show cause notice invoking larger period.
9. Financial flow back allegations.
10. Non-determination of price in retail sales.

Analysis:

1. The appellants, manufacturers of T.V. sets, appealed against the Order-in-Original confirming a duty demand under proviso to Section 11A of the Central Excise & Salt Act and imposing a penalty. They had filed classification and price lists, and the Inspector of Central Excise issued a questionnaire. The appellants clarified their sales pattern, including sales to a distributor without a formal agreement. A show cause notice in 1984 alleged undervaluation and misdeclaration, claiming higher actual selling prices. The appellants refuted these claims, stating sales were at arm's length and meeting all grounds.

2. The Commissioner issued an addendum show cause notice in 1988, alleging suppression of facts and related party transactions, despite the matter being closed for orders. The appellants argued against the addendum notice, citing time-barred demands and rejecting allegations of financial flow back. The Commissioner confirmed the demands, including a personal penalty, leading to the appeal.

3. The Tribunal found the demands time-barred, noting the appellants had provided records, invoices, and a Chartered Accountant's certificate in 1982, with no further investigation until the 1984 show cause notice. The addendum notice in 1988 introduced new grounds, which were considered time-barred as the department was aware of the facts since 1982. The Tribunal held that a new case could not be made through an addendum notice in pending proceedings, ultimately allowing the appeal due to the time-barred nature of the demands.

4. The Tribunal emphasized that the Commissioner's actions, including invoking the proviso to Section 11A after closing the matter for orders and issuing an addendum notice with new allegations, were unjustified. The appellants' arguments on the merits were also noted, but the Tribunal primarily focused on the time-barred nature of the demands as the basis for allowing the appeal and setting aside the impugned order.

5. In conclusion, the Tribunal set aside the order, allowing the appeal with any consequential relief. The decision was based on the findings that the demands were time-barred due to the delayed introduction of new allegations and the lack of further investigation despite the appellants providing necessary information earlier.