2000 (11) TMI 836 - AT - Central Excise

Summary

Issues Involved:
1. Barred by limitation - Suppression of facts.
2. Reversal of Modvat credit and payment of duty.
3. Imposition of penalty - Non-compliance with statutory requirements.

Analysis:

Issue 1: Barred by limitation - Suppression of facts
The case involved a dispute regarding the demand of duty on aluminium billets cleared for captive use in the manufacture of extruded products. The appellants argued that the demand raised in the show cause notice (SCN) for the period 1991-92 to 9-7-1996 was barred by limitation. They contended that there was no suppression of facts, and hence, the extended period of limitation under the proviso to Section 11A(1) of the Central Excise Act was not applicable. The appellants highlighted that the Department was aware of the relevant facts, and the demand was unjustified. However, the Tribunal found that since the duty was voluntarily paid before the issuance of the SCN without protest, the plea of limitation could not be sustained.

Issue 2: Reversal of Modvat credit and payment of duty
The appellants had reversed the Modvat credit in their records before the issuance of the SCN, believing that the billets were exempt from duty. Subsequently, it was discovered that duty was chargeable on the billets. The Tribunal noted that the reversal of credit was made in good faith and accepted by the Department. The appellants had paid the duty on the billets cleared for captive consumption and were entitled to take Modvat credit for the duty paid on inputs used in manufacturing the billets. Therefore, the Tribunal treated the reversal of Modvat credit as payment towards duty on the billets.

Issue 3: Imposition of penalty - Non-compliance with statutory requirements
The appellants had not filed a declaration under Rule 173B for availing duty exemption on billets used in manufacturing extruded products. They also failed to maintain statutory records or issue required invoices for the clearance of billets for captive consumption. The Tribunal found that these omissions were not satisfactorily explained and upheld the penalty imposed under Rule 173Q. Despite the appellants' arguments and abandoned pleas, the Tribunal deemed the penalty of Rs. 20,000 as justified and not excessive. Therefore, the penalty was upheld based on the non-compliance with statutory requirements.

In conclusion, the Tribunal allowed the appeal only to the extent of granting Modvat credit but rejected it on other grounds. The cross-objections were disposed of accordingly, maintaining the penalty imposed on the appellants for non-compliance with statutory provisions.