2001 (2) TMI 575 - AT - Central Excise

Summary

Issues:
1. Time limitation for issuing show cause notice.
2. Invocation of provisions under Section 11A for demand of duty.
3. Liability of penalty on the director.
4. Imposition of multiple penalties.

Issue 1: Time limitation for issuing show cause notice

The case involved a discrepancy in stock found during a visit to the factory premises, leading to a show cause notice issued beyond six months from the date of the visit. The appellant argued that the notice was time-barred. However, the Tribunal cited a precedent where the date of the officers' knowledge of clandestine removal cannot determine the notice period. As the notice alleged clandestine removal under Section 11A, the argument of being time-barred was dismissed. The notice invoked the provision for demand of duty based on the shortages found, the duty deposited by the appellants, and the alleged clandestine removal, making the notice valid within the extended period.

Issue 2: Invocation of provisions under Section 11A for demand of duty

The appellants did not contest the shortage of excisable goods or the duty amount. They voluntarily deposited the duty amount but challenged the show cause notice for not invoking the proviso under Section 11A. However, the notice clearly alleged clandestine removal of marble slabs without proper records or payment of duty. The notice demanded recovery of duty under Section 11A and mentioned penal action under Section 11AC. The Tribunal found the notice invoked the necessary provisions for demand of duty and penal action, rejecting the argument that the notice did not specify the provisions invoked.

Issue 3: Liability of penalty on the director

The director was not present during the verification of records, and no specific charge was made against him in the show cause notice or the original order. The Tribunal deemed the penalty imposed on the director as unsustainable due to the lack of a specific charge or involvement in the alleged actions. Therefore, the penalty on the director was set aside, concluding that he was not liable for the penalties imposed.

Issue 4: Imposition of multiple penalties

The Tribunal agreed to set aside the penalty imposed on the appellant under Rule 9(2) and the penalty on the director. It was deemed that the imposition of two penalties, one under Section 11AC and another under Rule 9(2), was not warranted based on the facts and circumstances of the case. With these modifications, the appeals were rejected, upholding the decision on other grounds while modifying the penalties imposed.

In conclusion, the Tribunal upheld the validity of the show cause notice within the extended period, confirmed the demand of duty and penalties against the appellants, set aside the penalty on the director, and modified the imposition of multiple penalties on the appellants.