2000 (3) TMI 511 - AT - Central Excise

Issues Involved:
1. Eligibility for exemption under Notification No. 175/86-CE.
2. Allegations of clandestine removal and non-compliance with Central Excise Rules.
3. Invocation of the extended period of limitation under Section 11A (1) of the Central Excises & Salt Act.
4. Validity of statements and retractions made by the appellants.
5. Confiscation of seized goods and imposition of penalties.

Detailed Analysis:

1. Eligibility for Exemption under Notification No. 175/86-CE:
The appellants, a registered SSI unit, were engaged in manufacturing parts of pressure cookers. The dispute centered around whether they could claim exemption under Notification No. 175/86-CE for goods affixed with the "ELITE" brand name, which belonged to another party, M/s. Lallubhai Amichand Limited. The Additional Collector found that the appellants were not entitled to the exemption for goods cleared from 1-10-1987 to 23-10-1989 as they bore the "ELITE" brand name. However, the appellants argued that they only started affixing the brand name from 12-6-1989, supported by letters from M/s. Lallubhai Amichand Limited and M/s. Modern Domestic Appliances. The Tribunal found that the lower authority's interpretation of these letters was erroneous and reversed the finding, concluding that goods cleared prior to 12-6-1989 were without the brand name, thus eligible for exemption.

2. Allegations of Clandestine Removal and Non-Compliance with Central Excise Rules:
The Department alleged that the appellants engaged in the manufacture and clandestine removal of pressure cooker parts without a Central Excise license, without filing classification/price lists, and without maintaining statutory records. The Additional Collector confirmed these allegations and imposed penalties. The Tribunal, however, found that the appellants had paid the duty for the period June-October 1989 and that the Department failed to establish that goods cleared before 10-6-1989 bore the "ELITE" brand name. Consequently, the demand for duty was set aside, but the confiscation of goods for non-compliance with statutory requirements was upheld.

3. Invocation of the Extended Period of Limitation:
The show-cause notice invoked the extended period of limitation under the proviso to Section 11A (1) of the Central Excises & Salt Act, citing mis-statement and suppression of facts by the appellants. The Tribunal noted that the appellants did not challenge this invocation in their appeal, nor was it argued by their advocate. Therefore, this issue was not examined further.

4. Validity of Statements and Retractions:
The appellants initially admitted to affixing the "ELITE" brand name on goods from 1-10-1987, but later retracted these statements, claiming they were mistaken. The Tribunal found the retraction credible, supported by corroborating evidence, including letters from M/s. Lallubhai Amichand Limited and M/s. Modern Domestic Appliances. The Tribunal held that the retracted statements, uncorroborated by independent evidence, could not be used against the appellants.

5. Confiscation of Seized Goods and Imposition of Penalties:
The Additional Collector ordered the confiscation of 4250 "ELITE" brand safety valves and imposed a penalty of Rs. 35,000/-. The Tribunal upheld the confiscation due to the appellants' failure to maintain statutory records and other procedural contraventions. However, considering the circumstances, the penalty was reduced to Rs. 10,000/-.

Conclusion:
The appeal was allowed in part. The demand for duty was set aside, but the confiscation of goods was upheld with a reduced penalty. The Tribunal emphasized the importance of corroborating evidence and proper interpretation of documentary evidence in reaching its conclusions.

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