1997 (12) TMI 390 - AT - Central Excise

Summary

Issues:
1. Alleged duty evasion by the appellants.
2. Validity of the extended period invoked for the demand.
3. Compliance with departmental instructions regarding repacking/reprocessing.
4. Imposition of penalty on the appellants.

Analysis:
1. The case involved an allegation of duty evasion amounting to Rs. 6,50,884.55 against the appellants, arising from the removal and re-depositing of yarn without payment of duty. The Collector confirmed a demand of Rs. 9,26,991.70 and imposed a penalty of Rs. 25,000.00 on the appellants.

2. The appellants argued that the show cause notice issued on 31-7-1986 was beyond the extended period for the duty demand, which originated in February and March 1984. They contended that they had informed the department about their intention to repack/reprocess the yarn, citing departmental instructions allowing such actions. The appellants maintained that the department was aware of their actions through proper documentation and entries in statutory records, thus challenging the validity of the extended period for the demand.

3. The Advocate for the appellants presented evidence of due intimation to the department regarding the repacking/reprocessing of yarn, supported by entries in the RG 1 register and RT 12 returns. The Tribunal found that the appellants had adequately informed the department, and their actions were in compliance with the established procedures. The Tribunal concluded that the demand for duty evasion could not be sustained based on the point of limitation alone, as the appellants had not suppressed any material aspect to evade duty.

4. The Tribunal rejected the Collector's belief that the appellants had engaged in suppression to evade duty, emphasizing the notifications to the department and proper record-keeping by the appellants. As the demand for the extended period was deemed invalid, the Tribunal set aside the impugned order, ruling in favor of the appellants and granting appropriate relief as warranted. The imposition of the penalty was also deemed unnecessary in light of the decision regarding the demand for duty evasion.