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1997 (4) TMI 252 - AT - Central Excise
Issues:
Recovery of excise duty and penalty under Central Excise Rules - Availing Modvat credit on undeclared inputs - Extended period of limitation invoked by the department - Suppression of facts by the appellants - Justification of penalty imposition. Analysis: The appellants, engaged in manufacturing and fabrication of steel structurals, were ordered by the Collector of Central Excise to pay a sum under the Central Excise Rules and a penalty. The dispute arose when the department claimed recovery of an amount for Modvat credit availed on items not declared by the appellants in their 57G declaration. The department invoked the extended period of limitation, alleging suppression of facts by the appellants. The Adjudicating authority upheld the duty demand and imposed a penalty on the appellants. The appellants argued that the demand was time-barred, as the department had knowledge of the credit availed on undeclared inputs since 1989. They contended that the department's awareness of the situation negated any suppression on their part, thus precluding the application of the extended period of limitation. The absence of a proposal for penalty in the show cause notice was highlighted as a ground for setting aside the penalty imposition. In the judgment, it was noted that the department had communicated with the appellants regarding the credit taken on undeclared items, and the RT 12 returns also reflected this information. The Tribunal referred to a previous case where it was held that if the department had knowledge of the credit availed by the appellants, the extended period of limitation could not be applied due to the lack of suppression. Following this precedent, the Tribunal ruled in favor of the appellants, setting aside the duty demand and penalty. Ultimately, the Tribunal concluded that since the department had prior knowledge of the appellants' actions, there was no suppression warranting the extended period of limitation. As a result, the duty demand and penalty were both set aside, and the appeal was allowed in favor of the appellants.
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