1996 (11) TMI 423 - AT - Central Excise

Demand - Limitation - Extended period - Invocation of - Suppression of facts - Demand - Show cause notice

Summary

Issues:
1. Differential duty amount and penalty imposed by CCE, Cochin.
2. Invocation of longer period under Proviso to Section 11A for suppression of facts.
3. Allegation of suppression against the appellants.
4. Legal validity of the second Show Cause Notice (SCN) issued by the Collector.
5. Interpretation of limitation period for issuing SCN in cases of suppression of facts.

Analysis:

1. The appeal challenges the order of the CCE, Cochin directing the appellants to pay a differential duty amount and a penalty. The appellants were directed to pay Rs. 1,46,723.34 as differential duty and a penalty of Rs. 20,000 was levied.

2. The appellant contended that an earlier SCN issued by the Asstt. Coll. did not culminate in an adjudication order, and subsequently, a second SCN was issued by the Collector invoking the longer period under Proviso to Section 11A for suppression of facts. The appellant argued that the second SCN was barred by limitation as the earlier SCN did not allege suppression.

3. The Department alleged that the appellants deliberately withheld information regarding the collection of additional charges, such as pre-delivery inspection charges, technical service charges, etc., from the Department to evade duty. The appellants had declared a lower price than the actual amounts collected from customers, indicating suppression.

4. The Tribunal analyzed whether the second SCN issued by the Collector attributing suppression to the appellants was legally maintainable. It was held that the second SCN, taking into consideration all facts on record, was validly issued by the competent officer under Proviso to Section 11A, despite suppression not being alleged in the earlier SCN.

5. Regarding the limitation period for issuing SCN in cases of suppression, the Tribunal held that the longer period of five years is available to the Department from the date of clearance of goods, once suppression is established. The plea that the SCN should be issued within six months of knowledge of suppression was deemed unsustainable, as Section 11A provides a five-year limitation for issuing SCN in cases of suppression.

6. The Tribunal referred to precedents and held that the order demanding duty and imposing penalty was sustainable in law. The penalty imposed was reduced to Rs. 10,000 for the ends of justice. The appeal was dismissed, except for the modification in the penalty amount.

This detailed analysis of the judgment from the Appellate Tribunal CEGAT, Chennai highlights the issues raised, arguments presented, and the Tribunal's findings regarding the differential duty amount, penalty imposition, suppression of facts, validity of SCNs, and interpretation of the limitation period for issuing SCN in cases of suppression.