2001 (1) TMI 387 - AT - Central Excise

Summary

Issues:
- Appeal against setting aside of Adjudication Order confirming Central Excise duty and penalty imposition.
- Invocation of extended period of limitation under Section 11A(1) of the Central Excise Act.
- Requirement of specific notice for invoking extended period.
- Clandestine removal of excisable goods and suppression of facts.

Analysis:

1. Adjudication Order Setting Aside:
The Revenue appealed against the setting aside of the Adjudication Order confirming Central Excise duty and imposing penalties. The Central Excise Officers found irregularities during a visit to the factory premises, leading to a discrepancy in stock. The Respondents admitted to the irregularities and deposited the duty amount before the show cause notice was issued. The appeal argued that the Commissioner (Appeals) erred in setting aside the Adjudication Order without invoking the proviso to Section 11A and specifying the commissions or omissions as required.

2. Invocation of Extended Period of Limitation:
The Revenue contended that the extended period of limitation was applicable due to the clandestine removal of excisable goods. The show cause notice explicitly mentioned the demand for Central Excise duty under Rule 9(2) of the Central Excise Rules read with Section 11A. The term 'clandestine' was defined to highlight the suppression of facts, justifying the invocation of the extended period under the proviso to Section 11A(1). The Supreme Court's precedent was cited to support the position that specific notice is necessary for invoking the extended period.

3. Specific Notice Requirement for Extended Period:
The Respondent's advocate argued that the Department failed to specify the commissions or omissions in the proviso to Section 11A(1) in the show cause notice, rendering the extended period inapplicable. Citing relevant case law, it was emphasized that the demand for an extended period must be clearly communicated to the assessee for it to be valid. The advocate contended that penalty imposition is contingent on sustaining the demand, which, if time-barred, precludes penalty imposition.

4. Clandestine Removal and Suppression of Facts:
The issue of clandestine removal of excisable goods and suppression of facts was central to the case. The Adjudication Order confirmed the demand based on the suppression of facts and the admission of clandestine clearance of goods without proper documentation or duty payment. The show cause notice explicitly mentioned the clandestine removal, fulfilling the requirement of putting the Respondents on notice regarding the specific omission under the proviso to Section 11A(1). The matter was remanded to the Commissioner (Appeals) for a fresh decision on merit, as the initial decision was based on the ground of limitation.

In conclusion, the judgment upheld the invocation of the extended period of limitation due to the suppression of facts and clandestine removal of excisable goods. The case was remanded for a fresh decision on merit, emphasizing the importance of specific notice requirements for invoking the extended period under Section 11A(1) of the Central Excise Act.