2017 (1) TMI 1178 - AT - Central Excise

Evasion of duty - the appellants have not submitted the relevant costing information and not paid the applicable duty with an intention to evade payment of duty - demand of duty, interest and penalty - Time limitation - Held that - the requisite information has been sought by department on 01.12.2002 and appellant replied on 10.12.2002. However the Show Cause Notice was issued only on 29.12.2005. Appellant sought for assessment on provisional basis at the beginning itself, which was not however extended by department. It is also not disputed that the appellant was filing statutory returns all through the period. In these circumstances the issue of the Show Cause Notice beyond the normal period of limitation is found without any good reason. This being the case the SCN will have to be treated as hit by limitation - demand being time barred, is set aside - appeal allowed - decided in favor of assessee.

Summary

Issues: Limitation aspect of the appeal regarding the demand for duty, interest, and penalties raised by the Department.

Analysis:
1. Facts of the Case: The Appellants manufactured Cable Jointing Kits (CJKs) in which an intermediate product, Heat Shrinkable Sleeves (HSSs), was excisable. The appellants consumed the HSSs captively for CJKs production and determined the assessable value using cost accounting methods.

2. Department's Allegations: The Department alleged that the appellants evaded duty payment by not submitting relevant costing information and not paying the applicable duty. A show cause notice was issued demanding differential duty, interest, and penalties under various sections of the Central Excise Act and Rules.

3. Adjudication and Appeal: The Joint Commissioner confirmed duty, interest, and imposed penalties. The Commissioner (Appeals) rejected the appeal, leading the appellants to file two appeals challenging the orders.

4. Grounds of Appeal: During the hearing, the appellants contested the limitation aspect, citing previous cases where the Tribunal set aside demands on limitation grounds for similar circumstances. The Department, however, supported the correctness of the impugned order.

5. Judgment: The Tribunal found that the Show Cause Notice was issued beyond the normal period of limitation without valid reasons. Despite the Department seeking information in 2002 and the appellant's timely response, the Notice was issued in 2005. The Tribunal concluded that the demands were time-barred, rendering the impugned orders unsustainable. Consequently, the appeals were allowed with any consequential benefits as per law.

This judgment primarily focused on the limitation aspect of the appeal, highlighting the importance of adhering to statutory timelines in issuing Show Cause Notices for duty demands. The Tribunal's decision emphasized the need for timely actions by the Department and upheld the principle of limitation in excise duty matters, ultimately ruling in favor of the appellants based on the time-barred nature of the demands.