2000 (5) TMI 383 - AT - Central Excise

Summary

Issues Involved:
1. Wrongful availing of exemption benefit under Notification No. 49/86.
2. Invocation of extended period of limitation under Section 11A(1).
3. Correct determination of Central Excise duty.
4. Imposition of penalties on the appellants and their partners.
5. Imposition of penalty on M/s. Bata India Ltd. under Rule 209A.

Detailed Analysis:

1. Wrongful Availing of Exemption Benefit:
The appellants, M/s. New Decent Footwear Industries, claimed exemption under Notification No. 49/86 for footwear manufactured without the use of power. The Commissioner found that the appellants had used power in Unit No. I for processes requiring power, contrary to their claim that Unit No. II operated without power. The Outward Register indicated that goods cleared without duty were actually manufactured with power. The appellants failed to prove that the movement of goods from the Head Office to Unit No. I did not include footwear manufactured in Unit No. II. The Tribunal concluded that the duty exemption was wrongly claimed.

2. Invocation of Extended Period of Limitation:
The appellants argued that they had disclosed the details of their two units to the Department and there was no suppression of facts. However, the Commissioner held that the appellants had not disclosed that both units were essentially one and the same, and that manufacturing processes requiring power were completed in Unit No. I. The Tribunal upheld the invocation of the extended period under Section 11A(1), finding that there was suppression of facts with intent to evade duty.

3. Correct Determination of Central Excise Duty:
The Commissioner determined a duty demand of Rs. 34,24,393/- based on the records. The appellants contested the computation, but the Tribunal found no specific material to show that the computation was factually incorrect. The duty demand was confirmed.

4. Imposition of Penalties on the Appellants and Their Partners:
A penalty of Rs. 10 lakhs was imposed on M/s. New Decent Footwear Industries under Rule 173Q. The Tribunal found this amount proportionate to the duty evasion. However, penalties of Rs. 1 lakh each on the three partners were set aside, as there was no justification for these additional penalties.

5. Imposition of Penalty on M/s. Bata India Ltd. under Rule 209A:
The Commissioner imposed a penalty of Rs. 5 lakhs on M/s. Bata India Ltd., alleging they knew the footwear was liable to confiscation. M/s. Bata India Ltd. argued they were merely purchasers and had no knowledge of any wrongdoing by M/s. New Decent Footwear Industries. The Tribunal found no evidence that M/s. Bata India Ltd. had prior knowledge or reason to believe the goods were liable to confiscation. The penalty imposed on M/s. Bata India Ltd. was set aside.

Conclusion:
The Tribunal confirmed the duty demand and the penalty on M/s. New Decent Footwear Industries but set aside the penalties on the partners and M/s. Bata India Ltd. The appeals were disposed of accordingly.