2001 (4) TMI 351 - AT - Central Excise

Summary

Issues:
1. Confirmation of demand of Central Excise Duty and imposition of penalty.
2. Mis-declaration leading to duty demand and penalty imposition.
3. Interpretation of Rule 196 of Central Excise Rules.
4. Application of limitation period in duty demand cases.

Confirmation of Demand and Penalty Imposition:
The case involved an appeal against the confirmation of demand of Central Excise Duty and penalty imposition. The appellant, engaged in manufacturing Iron & Steel products, faced demands amounting to Rs. 44,78,167.02 and a penalty of Rs. 5 lakhs. The appellant manufactured components and parts, some of which were cleared after paying duty, while others were brought to the main plant for repairs and maintenance. The appellant claimed the benefit of an exemption notification, but SCNs were issued questioning the duty exemption and imposing penalties.

Mis-declaration Leading to Duty Demand:
The appellant argued that there was no mis-declaration, emphasizing that the goods brought to the main plant were declared, and the department was aware of the situation. The appellant's counsel contended that the demand was time-barred due to the absence of mis-declaration. However, the respondent argued that mis-declaration had occurred regarding the classification of goods and their intended use for machinery maintenance, leading to a complete mis-declaration.

Interpretation of Rule 196:
The demand was raised under Rule 196 of the Central Excise Rules, which was considered a self-contained code for duty demand in cases where goods were not properly accounted for. The respondent highlighted that Rule 196 did not require proof of wilful misstatement or suppression to demand duty. Citing a Supreme Court decision, the respondent argued that demands made under Rule 196 were not subject to the limitation of Section 11A of the Central Excise Act.

Application of Limitation Period:
The main issue revolved around the limitation period for duty demand. Both sides debated whether mis-declaration or suppression had occurred, with the appellant denying any intention to evade duty. The Tribunal noted that misdeclaration had taken place, as the goods were removed without duty payment and were not used for machinery maintenance. Referring to previous court decisions, the Tribunal upheld the demand under Rule 196, stating that limitation did not apply under Section 11A(1) or Rule 196. Consequently, the appeal was rejected, affirming the duty demand and penalty imposition.