1999 (8) TMI 960 - AT - Central Excise

Summary

Issues:
Duty demand confirmation against M/s. TIL Ltd. and penalty imposition on the company and its Accounts Manager under Rule 209A of the Central Excise Rules; Confiscation of assets and DG sets; Recalculation of duty demand; Abatement of excise duty element; Adjustment of amount paid under protest; Dispute over assessable value; Modvat credit denial; Invocation of extended period of limitation; Bona fide belief defense; Setting aside of demand and penalties.

Detailed Analysis:

1. Duty Demand and Penalties:
The Commissioner of Central Excise confirmed a duty demand against M/s. TIL Ltd. and imposed penalties on the company and its Accounts Manager under Rule 209A of the Central Excise Rules. The duty demand related to clearances of DG sets without payment of duty. Assets of M/s. TIL Ltd. and the DG sets found at various premises were confiscated with an option to redeem upon payment of fines.

2. Recalculation of Duty Demand:
The appellant's counsel argued for the recalculation of duty demand on various grounds, including clearances to certain customers on payment of duty, canceled orders, abatement of excise duty, adjustment of amounts paid under protest, and disputing the assessable value of DG sets supplied to a customer. The counsel also sought the extension of Modvat credit for duty paid on inputs used in manufacturing DG sets.

3. Extended Period of Limitation and Bona Fide Belief Defense:
The appellant challenged the invocation of the extended period of limitation, citing a CBEC Circular that led to a bona fide belief that the DG sets assembled were not liable to duty. The appellant argued that no suppression with intent to evade payment of duty existed, and thus, the demand should be set aside. The penalties on the company and its Accounts Manager were also contested on similar grounds.

4. Adjudicating Authority's Findings and Justification:
The SDR reiterated the findings of the adjudicating authority, alleging deliberate concealment by M/s. TIL Ltd. to evade duty payment. The SDR supported the imposition of penalties on the manufacturer, its officer, and the customers. It was suggested that the matter be remanded for re-quantification of duty amount based on the submissions made by TIL.

5. Judgment and Decision:
The Tribunal acknowledged the duty liability on DG sets but held that the demand beyond the normal six-month period was not sustainable due to the appellant's bona fide belief based on the 1986 Circular. The Tribunal set aside the demand as barred by limitation, consequently nullifying the penalties imposed on the manufacturer, its Accounts Manager, and the customers. The appeals were allowed in favor of the appellants.

This judgment highlights the legal intricacies surrounding duty demands, penalties, extended periods of limitation, bona fide beliefs, and the application of relevant legal provisions in excise matters.