2000 (9) TMI 571 - AT - Central Excise

Summary

Issues:
- Appeal against Commissioner (Appeals) order granting relief on limitation issue.
- Allegations of captively consuming unbranded tobacco without paying Central Excise duty.
- Confirmation of duty evasion and penalty imposition by Deputy Commissioner.
- Appeal filed by the party against the Deputy Commissioner's order.
- Commissioner (Appeals) setting aside the order on the ground of time-barred Show Cause Notice.
- Arguments regarding suppression of facts, misdeclaration, and Modvat credit.
- Revenue's contention on physical control over the factory and classification list filing.
- Decision on the extended time-limit for issuance of show cause notice.
- Consideration of Modvat credit benefit and intention to evade duty payment.

Analysis:
1. The case involves an appeal by the Revenue against the Commissioner (Appeals) order providing relief to the respondents concerning the limitation issue. The dispute revolves around the alleged captively consumed unbranded tobacco without paying Central Excise duty, leading to duty evasion accusations.

2. The Deputy Commissioner's Order-in-Original confirmed the duty evasion by the party and imposed a penalty for not paying Central Excise duty on the unbranded chewing tobacco consumed captively. The party's failure to mention unbranded Khaini in the classification list and not availing Modvat credit were key points in the decision.

3. The party appealed the Deputy Commissioner's order, leading to the Commissioner (Appeals) setting it aside primarily due to the Show Cause Notice being considered time-barred. The Commissioner emphasized that the non-mention of unbranded items in the classification list did not necessarily indicate suppression or misdeclaration of facts.

4. The Revenue argued that the party's unit was under physical control until 1994 and transitioned to Self Removal Procedure (SRP) thereafter, highlighting the obligation to file a comprehensive classification list. However, the Commissioner found that the Revenue's awareness of the manufacturing process over the years weakened the claim of ignorance regarding the unbranded chewing tobacco.

5. The decision hinged on whether the extended time-limit for issuing the Show Cause Notice was applicable. The Commissioner upheld the limitation defense, considering the Revenue's long-standing knowledge of the manufacturing process and the lack of intention to evade duty payment by the party.

6. The analysis also delved into the Modvat credit benefit entitlement and the necessity to extend it to the party in case of subsequent duty demands on unbranded chewing tobacco. The overall conclusion favored the party, rejecting the Revenue's appeal and disposing of cross objections accordingly.