1997 (4) TMI 261 - AT - Central Excise

Summary

Issues:
- Denial of Modvat credit under three headings
- Imposition of penalty
- Barred by limitation
- Lack of jurisdiction in issuing show cause notice

Denial of Modvat Credit:
The judgment revolves around the denial of Modvat credit under three headings: (a) credit on steel tubes not covered by the deemed credit order, (b) credit taken on GP 1s which were not endorsed, and (c) credit on steel scrap not declared by the appellants. The lower authorities imposed a penalty of Rs. 20,000 along with the denial of credits.

Barred by Limitation:
The appellant argued that the demand is barred by limitation as the show cause notice was issued beyond the statutory 6-month period. They contended that the department was aware of the credit taken by the appellants through various filings and correspondence, thus ruling out suppression with intent to evade duty. The jurisdictional issue was raised concerning the authority of the Assistant Collector to issue the notice beyond the 6-month period.

Lack of Jurisdiction in Issuing Show Cause Notice:
The Departmental Representative argued that the Collector of Central Excise is the proper officer for raising demands beyond the normal 6-month period. However, the judgment highlighted that the extended period of limitation was not applicable as there was no suppression on the part of the appellants to evade duty. The judgment referred to a previous case to support this finding.

Analysis and Conclusion:
The tribunal agreed with the appellant's submissions, emphasizing the correspondence exchanged and filings made by the appellants, which negated any suppression of facts. The judgment cited a previous case to support the view that the demand of duty was indeed barred by limitation. Additionally, it was held that the Assistant Collector lacked jurisdiction to issue the show cause notice beyond the 6-month period, as per the Board's instructions. Consequently, the demand of duty and penalty were set aside, and the appeal was allowed.