2004 (6) TMI 183 - AT - Central Excise

Summary

Issues involved:
Interpretation of Notification No. 355/86-C.E., dated 24-6-86 regarding duty payment on final product (Machine Rolled Cigarettes) and recovery from customers. Time-barred demand due to recovery of excess duty.

Detailed Analysis:

1. Interpretation of Notification No. 355/86-C.E.:
The appeal concerns the interpretation of Notification No. 355/86-C.E., dated 24-6-86, related to duty payment on final product (Machine Rolled Cigarettes). The appellants claimed they had paid full duty on the final product and were entitled to recover the same from customers. They argued that the notification allowed set off of duty paid on input cut tobacco towards duty on final product. The Counsel cited legal precedents to support their contention.

2. Time-barred demand:
The appellants contended that the demand was time-barred as the show cause notice was served after a significant delay from the date when the department became aware of the duty recovery from customers. They relied on legal precedent to support their argument.

3. Notification Interpretation and Legal Precedents:
The Tribunal analyzed the plain wording of the notification and emphasized that it provided exemption from duty on the final product to the extent of duty paid on the input cut tobacco. The Tribunal highlighted that the notification did not allow set off or credit on duty paid on inputs towards the final product. Previous judgments in the appellants' case and related circulars were examined to clarify the notification's scope.

4. Recovery of Excess Duty and Section 11D:
The Tribunal established that the appellants could not recover more duty from customers than what they had paid on the final product. The appellants were directed to deposit the excess duty with the Government under Section 11D of the Act. Legal precedents cited by the appellants were distinguished based on the specific circumstances of those cases.

5. Time-barred Demand and Administration of Justice:
Regarding the time-barred demand, the Tribunal rejected the contention, stating that no specific limitation period was prescribed for recovery under Section 11D. Emphasizing the need for timely action to prevent revenue loss, the Tribunal upheld the department's actions within a reasonable timeframe, despite technicalities raised by the appellants.

6. Conclusion:
After a thorough analysis of the issues, the Tribunal upheld the impugned order of the Commissioner (Appeals) and dismissed the appeal of the appellants. The decision was based on the interpretation of the notification, applicability of Section 11D for excess duty recovery, and the reasonable timeframe for departmental actions in the absence of a specific limitation period.