1999 (11) TMI 283 - AT - Central Excise

Summary

Issues Involved: The issues involved in the judgment are evasion of duty amount, imposition of penalties, limitation period for issuing show cause notice, and determination of separate existence of units.

Evasion of Duty and Imposition of Penalties: M/s. Jalla Industries, operating under Notification 1/93, purchased horns from M/s. Veejay Corporation to reduce the value of clearances artificially. The investigation alleged evasion of Rs. 72,405.30 and imposed penalties on both companies and their partner. The Deputy Commissioner's exparte order confirmed the demand and penalties, citing fragmentation. The Commissioner (Appeals) upheld the lower order, disregarding arguments of limitation and separate existence of units.

Limitation Period for Show Cause Notice: The appellants argued that the show cause notice issued on 22-12-1994, despite department's knowledge on 5-4-1994, was beyond the limitation period. Citing precedent, they contended that the proceedings were time-barred. The Tribunal found that the demand was indeed barred by limitation, emphasizing the mandatory requirement to issue notice within six months of acquiring knowledge.

Determination of Separate Existence of Units: The Tribunal examined evidence indicating the separate existence of M/s. Jalla Industries and M/s. Veejay Corporation. Lack of worker statements confirming horn production at M/s. Jalla Industries, unrefuted claim of manual horn manufacturing at M/s. Veejay Corporation, and absence of evidence showing financial control supported the conclusion of independent units. The Tribunal highlighted the paucity of evidence against the assessees and the lack of discussion in lower authorities' orders.

Conclusion: The Tribunal allowed the appeals, granting consequential relief to the appellants based on the findings of evasion of duty, imposition of penalties, the limitation period for issuing the show cause notice, and the determination of separate existence of units.