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2006 (8) TMI 428 - AT - Central ExciseDemand of duty - Bar of limitation u/s 11A(1) - Abatement of duty - Closure of stenter - Penalty imposed u/s 11AC - description of the grey fabrics not given by Co-optex so as to enable them to identify the goods as ‘powerloom fabrics’ - HELD THAT:- It is evident tfrom record that, when the Mills were removing the subject goods (processed powerloom fabrics) without payment of duty, they were aware of the fact that they were removing dutiable goods. They were so doing apparently with intent to evade payment of duty. We found that the Mills were clearing dutiable goods (processed powerloom fabrics) without payment of duty during the period of dispute, without disclosing to the Department the correct identity of the goods. They have not shown that their monthly returns contained any particulars enabling the Department to discern that they had actually removed processed powerloom fabrics. It was only after visit by Departmental officers to their premises that the Mills admitted having removed dutiable goods without payment of duty. Suppression of material fact with intent to evade payment of duty is evident in this case. Thus, we held that the extended period of limitation was rightly invoked in this case for demanding duty from the Mills in respect of the processed powerloom fabrics supplied to Co-optex during the period of dispute. The appeal of the Mills contains a claim for abatement of duty on the ground of closure of some of their stenters. This is a claim under Compounded Levy Scheme. Now that the appellants themselves have repudiated the scheme and have chosen to follow Section 3 of the Central Excise Act in respect of the goods processed and cleared by them during the compounded levy period, this claim for abatement of duty is untenable. The Mills have also claimed the benefit of Section 4(4)(d)(ii) of the Act. This claim is admissible to them in terms of the Supreme Court’s decision in Commissioner v. Maruti Udyog Ltd.[2002 (2) TMI 101 - SUPREME COURT]. The Commissioner has to re-quantify the demand of duty on this basis. As we have found against the Mills suppression of facts with intent to evade duty, interest on duty is leviable u/s 11AB of the Act as held by the Commissioner. For the same reason, penalty is imposable on the Mills u/s 11AC of the Act. But we do not think that an amount equal to duty should compulsorily be imposed under this provision in the facts and circumstances of this case. It is settled law that the quantum of penalty prescribed u/s 11AC is the maximum and it is open to the adjudicating authority, in proper exercise of his discretion, to impose a lesser penalty, having regard to the facts and circumstances of the case. We leave this aspect to be considered by learned Commissioner, who is directed to re-determine the quanta of duty and penalty after giving the party a reasonable opportunity of being heard. Appeal No. 451/2005 is, accordingly, disposed of. We have already found that, on the available evidence, Co-optex cannot be held to have misdeclared the grey fabrics or to have abetted the offence committed by the Mills. Any penalty on them is unwarranted. Hence appeal No. 491/2005 is allowed.
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