2000 (10) TMI 127 - AT - Central Excise

Summary

Issues Involved:
1. Maintainability of the duty demand for the period September 1981 to February 1983.
2. Imposition of penalty under Rule 9(2) read with Rule 52A of the Central Excise Rules.
3. Appeal of the Revenue against the method of requantifying duty and the imposition of a small penalty.

Issue-wise Detailed Analysis:

1. Maintainability of the Duty Demand:
The primary contention of the assessee was that the duty demand for the period September 1981 to February 1983 was not maintainable because the duty demand for the period July 1973 to February 1983 had already been finalized by the jurisdictional Assistant Collector. This finalization fixed a duty liability of Rs. 387 crores, which was later recomputed to Rs. 21.58 crores and deposited by the assessee. The Revenue did not challenge this finalization, making it final and precluding the possibility of another order for a part of the period. The Tribunal noted that the duty demand made in the show cause notice dated 1-10-1986 for the period September 1981 to February 1983 had merged in the finalization of provisional assessment made by the Assistant Collector. The Tribunal emphasized that the Collector of Central Excise had left the duty demand raised in the show cause notice to be included in the finalization of the provisional assessment, and since the Revenue did not challenge that order, the duty demand became final. Consequently, no second demand could be made in another adjudication proceeding by the Commissioner. The Tribunal set aside the duty demand of over Rs. 17 crores made in the impugned order.

2. Imposition of Penalty:
The assessee argued that no penalty was imposable as the assessments were provisional and the law relating to valuation of central excise duty was in flux during the relevant period. The Tribunal, however, found that the appellants' plea against imposition of penalty had no force. The Tribunal referred to the Delhi High Court's judgment, which held that finalization of provisional assessments and proceedings for recovery of fraudulently evaded Central Excise Duty are entirely separate. Penalty is rightly imposable even in a case of provisional assessment if the charge of evasion of duty by fraudulent methods is correct. The Tribunal also cited the decision in ITC's case, which held that penalty under Rule 9(2) is not confined to clandestine removals and can be imposed even if the assessee is working under physical control. The Supreme Court upheld this decision. The Tribunal noted that definite allegations were made against the appellants for arranging the collection of additional amounts over and above the declared price through named companies, and these allegations were upheld in the adjudication order. Therefore, the Tribunal found no reason to interfere with the penalty imposed and confirmed the penalty of Rs. 1 crore.

3. Appeal of the Revenue:
The Revenue's appeal was against the method of requantifying duty on the basis of cum-duty price and the imposition of a small penalty. Since the Tribunal held the duty demand to be not maintainable, the correctness or otherwise of its computation was not a relevant question. The appeal did not provide any substantial ground as to how the penalty was small, except for stating that it was meagre. Consequently, the Tribunal found no merit in the appeal of the Revenue.

Conclusion:
The Tribunal set aside the duty demand of over Rs. 17 crores and confirmed the penalty of Rs. 1 crore imposed on the appellants. Both the appeals were disposed of accordingly.