2002 (4) TMI 422 - AT - Central Excise

Summary

Issues:
1. Time-barred demand
2. Imposition of penalty before quantifying Modvat credit

Analysis:

Issue 1: Time-barred demand
The appeal was filed against the order-in-appeal passed by the Commissioner (Appeals) regarding the appellants' activity of repacking imported goods, which was deemed as manufacturing post 1997 budgetary changes. The appellants did not declare or inform the excise department about this activity, leading to a show cause notice for non-payment of duty. The contention that the demand was time-barred was rejected as there was suppression of facts by the appellants. The Tribunal cited the Nizam Sugar Factory case, emphasizing that it is the assessee's responsibility to disclose accurate information to the excise department. Hence, the demand for duty from March 1997 to December 1998 was deemed not time-barred due to the extended period of limitation being rightly invoked.

Issue 2: Imposition of penalty before quantifying Modvat credit
The second contention raised was regarding the imposition of a penalty when the Modvat credit had not been quantified by the competent authority as directed by the Commissioner (Appeals). The Tribunal agreed with this argument, stating that the penalty should be reconsidered after the Modvat benefit is determined. Once the Modvat benefit reduces the duty liability, the penalty should align with the revised duty amount. Therefore, the penalty imposed on the appellants was set aside, while the duty demand was upheld. The Modvat claim eligibility would be examined as per the Commissioner (Appeals) direction, and the penalty reconsidered based on the final duty amount post-Modvat allowance.

In conclusion, the Tribunal disposed of the appeal by upholding the duty demand but setting aside the penalty, pending the assessment of Modvat credit and its impact on the duty liability.