2000 (6) TMI 247 - AT - Central Excise

Summary

Issues:
1. Whether the demand of central excise duty and penalty imposed on the appellants is justified.
2. Whether the extended period of limitation for demanding central excise duty is applicable due to alleged suppression of material facts by the appellants.

Analysis:
1. The appellants, engaged in the business of Project Engineers, erection, and commissioning of air conditioning systems, appealed against the demand of duty and penalty imposed by the Additional Collector. The Appellate Tribunal earlier rejected their appeal but later allowed a rectification of mistake application. The issue revolved around the fabrication and erection of ducts for air conditioning systems and flanges at the premises of a company. The department claimed the appellants suppressed material facts, leading to a delayed show cause notice for central excise duty for the period 1989-90. The appellants argued that they had informed the department about the awarded contract, the fabrication work, and the nature of the activity undertaken. The Tribunal found that the department was fully aware of the appellants' activities, and thus, the demand of duty beyond the 6-month period was barred by limitation.

2. The department contended that the appellants did not declare the manufacture of excisable goods or obtain a license, indicating a suppression of material facts. They argued that the value of the manufactured goods was not provided, leading to the delayed show cause notice. However, the Tribunal observed that the department was informed about the contract and the work being carried out by the appellants. The Tribunal cited previous Supreme Court judgments to support its decision. It referred to the case of Padmini Products v. CCE, where failure to take a license or pay duty, in case of doubt, does not warrant an extended period of limitation. Additionally, it mentioned the case of CCE v. Malleable Steel & Iron vs. CCE, emphasizing that the department's awareness of the nature of the product manufactured negates any allegation of suppression. Consequently, the demand was deemed time-barred under Section 11A(1) of the Central Excise Act, leading to the allowance of the appeal on the time limit issue.