1997 (3) TMI 303 - AT - Central Excise

Summary

Issues Involved:
1. Limitation period for demand of duty.
2. Alleged suppression or willful misstatement by the appellant.
3. Applicability of penalty under the Central Excise Act.

Detailed Analysis:

Limitation Period for Demand of Duty:
The primary issue revolves around the limitation period for demanding duty. The appellants argued that the show cause notice issued on 30-4-1993 for the period 1988-89 to 26-11-1991 was beyond the six-month limitation period stipulated under the Central Excise Act. They contended that there was no suppression, willful misstatement, or contravention of any rule with the intent to evade duty. The appellants had been regularly submitting information to the department, declaring the existence of two units and their respective clearances. The Tribunal found merit in the appellants' argument, noting that the facts were known to the department and there was no suppression or willful misstatement. Consequently, the Tribunal held that the entire demand was time-barred and not sustainable in law.

Alleged Suppression or Willful Misstatement by the Appellant:
The department alleged that the appellants suppressed material information to evade duty. They argued that the total sale value was declared late and that the appellants did not take a Central Excise license or observe statutory formalities. However, the Tribunal found that the appellants had been transparent about their operations, submitting classification lists and returns regularly. The Tribunal concluded that there was no suppression or willful misstatement, and thus, the extended period for demanding duty was not applicable.

Applicability of Penalty under the Central Excise Act:
The Tribunal was divided on the issue of imposing a penalty. One member (Technical) suggested reducing the penalty to Rs. 50,000, acknowledging that the appellants should have considered the aggregate value of clearances for determining the duty rate. The other member (Judicial) argued against any penalty, stating that the department failed to establish any contravention of provisions of the Act or Rule. The Judicial Member emphasized that the appellants had not committed any suppression, misdeclaration, or willful misstatement, and thus, no penalty was warranted. The third member (Technical) agreed with the Judicial Member, concluding that without evidence of intent to evade duty, no penalty should be imposed.

Conclusion:
The Tribunal unanimously agreed that the demand for duty was time-barred due to the absence of suppression or willful misstatement. However, there was a difference of opinion regarding the imposition of a penalty. Ultimately, the Tribunal decided that no penalty should be imposed on the appellants, as there was no deliberate contravention of any rule with the intent to evade duty. The impugned order was modified accordingly, and the appeal was disposed of with the demand being set aside and no penalty imposed.