1998 (3) TMI 446 - AT - Central Excise

Summary

Issues:
1. Confirmation of demand of duty invoking extended period of limitation under Section 11A(1) of the Central Excises and Salt Act, 1944.
2. Imposition of penalty under Rule 173Q(1) of the Central Excise Rules, 1944.
3. Argument on limitation by the appellant firm.
4. Interpretation of the Tribunal's earlier order regarding limitation and publicity of ship-manufacturing activity.
5. Consideration of the Tribunal's findings on limitation and duty demands.

Analysis:
The judgment by the Appellate Tribunal CEGAT, Calcutta, involved the confirmation of a duty demand and imposition of a penalty on the appellant firm for alleged non-payment of duty on manufactured goods. The Commissioner invoked the extended period of limitation under Section 11A(1) of the Central Excises and Salt Act, 1944, confirming a demand of Rs. 21,36,939.00 and imposing a penalty of Rs. 5.00 lakhs under Rule 173Q(1) of the Central Excise Rules, 1944. The appellant firm, a Government of India Undertaking engaged in manufacturing ship-building and other engineering products, contested the demand primarily on the grounds of limitation.

The appellant argued that there was no suppression or misstatement on their part, as both the firm and Departmental Officers believed no duty was leviable on the goods in question due to a Customs Notification exempting ocean-going vessels. They contended that the extended period of limitation should not apply, citing wide publicity of their ship-manufacturing activities through electronic media and newspapers. However, the respondent Commissioner argued that the Tribunal's earlier order in a similar case held that publicity did not equate to declaration of production to the Department, emphasizing the appellant's failure to seek clarification on their duty liability.

The Tribunal, after considering both sides' submissions, rejected the appellant's limitation argument. Referring to their earlier order, the Tribunal highlighted that the appellant's failure to pay duty on various goods for ten years without seeking clarification demonstrated negligence, upholding the demand for duty up to five years. The Tribunal emphasized that publicity did not absolve the appellant of their duty liability, as no formal declaration was made to the Central Excise Officers, and statutory documents were not filed, leading to clearance without duty payment.

Ultimately, the Tribunal upheld the Commissioner's order, rejecting the appellant's appeal based on the findings from the earlier case and the failure to demonstrate any merit in their argument. The judgment reinforced the importance of compliance with duty payment obligations and the insufficiency of publicity alone to establish knowledge of duty liability, emphasizing the need for formal declarations and adherence to statutory requirements in manufacturing and clearance processes.