1999 (8) TMI 561 - AT - Central Excise

Summary

Issues:
- Duty demand on finished products
- Benefit of notifications 101/66 and 217/86
- Extended period of limitation
- Penalty imposition on the appellants

Duty Demand on Finished Products:
The appeals contested duty demand on finished products, specifically organic surface active preparations, manufactured and cleared by the assessee. The Collector denied the benefit of notification 101/66 to the emulsifiers, wetting out agents, and similar preparations, stating that the condition of the notification was not met as the surface active agents used did not pay the appropriate excise duty. The appellant argued that the department was aware of its simultaneous availing of notifications 101/66 and 217/86 through approved classification lists and RT-12 returns. The appellant claimed that the extended limitation period under section 11A(1) should not apply due to the department's knowledge of the situation.

Benefit of Notifications 101/66 and 217/86:
The departmental representative contended that the appellant could not avail of both notifications simultaneously, as each notification excludes the applicability of the other. It was argued that the appellant suppressed information by not clearly indicating the products for which each notification was intended. The Tribunal observed that notification 217/86 applied to goods used in the manufacture of duty-paid finished products, while notification 101/66 exempted products made from surface active agents on which duty had been paid. The Tribunal noted that the appellant's simultaneous availing of both notifications did not constitute suppression of facts by the appellant.

Extended Period of Limitation:
The question arose whether the extended period under the proviso to section 11A was available to the department. The appellant had indicated its intention to avail of both notifications 101/66 and 217/86 in approved classification lists and RT-12 returns. The Tribunal held that the department's approval of these documents indicated its awareness of the appellant's simultaneous availing of the notifications. The Tribunal concluded that the demand for the disputed period was barred by limitation, as the department failed to act despite knowing the appellant's actions.

Penalty Imposition on the Appellants:
Regarding penalty imposition, the Tribunal reduced the penalty proportionately due to the reduced duty amount. The order highlighted that the notice and the Collector's order did not provide clear reasons for imposing penalties on the appellants. The Tribunal found that the penalty was not imposable on the appellants as the presence of knowledge or reason to believe they were liable for confiscation was not adequately demonstrated.

In conclusion, the Tribunal allowed the appeal in part, confirming the demand for the remaining period not in question and reducing the penalty imposed on the appellant. The penalty was deemed not imposable on the other appellants due to insufficient evidence of their involvement in the alleged violations.