1998 (3) TMI 385 - AT - Central Excise

Summary

Issues Involved:
1. Allegation of clandestine removal of seven air-conditioners.
2. Allegation of removal of 14 air-conditioners without proper classification and payment of excise duty.
3. Invocation of the extended period of limitation.
4. Imposition of penalty.

Detailed Analysis:

1. Allegation of Clandestine Removal of Seven Air-Conditioners:
The appellants were accused of removing seven air-conditioners without proper documentation and payment of excise duty. The Collector found that the appellants' explanation that these were removed by employees in the absence of the partner was unsupported by evidence. The appellants did not communicate that the air-conditioners were old and brought in for repairs, nor did they obtain permission under Rule 51A for bringing duty-paid old air-conditioners into the factory. The appellants had also used three compressors for repairs without debiting their RG 23A Part II Account. The Collector concluded that the appellants' failure to inform the Department about the removal without payment of duty amounted to suppression. The tribunal upheld the Collector's decision, noting that the appellants had paid the duty, and the extended period of limitation was correctly invoked.

2. Allegation of Removal of 14 Air-Conditioners Without Proper Classification and Payment of Excise Duty:
The Collector observed that the appellants manufactured air-conditioners bearing the brand name "Accord," which disentitled them from the benefit of Notification No. 75/87. The agreement between the appellants and M/s. Accord Equipments indicated that the appellants were obliged to manufacture "Accord" branded air-conditioners and supply them to M/s. Accord Equipments. The Collector found that the appellants were manufacturing and clearing "Accord" brand air-conditioners, although the appellants argued that the brand name was affixed after delivery at the installation site. The tribunal found that the Collector's conclusion was not supported by clear evidence that the brand name "Accord" was affixed at the appellants' factory. The tribunal referred to case law, including Madura Coats v. C.C.E., which held that SSI exemption cannot be denied if the brand name is affixed after manufacture. Consequently, the tribunal set aside the demand of duty for the 14 air-conditioners.

3. Invocation of the Extended Period of Limitation:
The appellants argued that there was no willful evasion of duty and that the duty had been paid before the issuance of the SCN. The tribunal found that the appellants' failure to inform the Department about the removal without payment of duty amounted to suppression, justifying the invocation of the extended period of limitation.

4. Imposition of Penalty:
The Collector imposed a penalty of Rs. 25,000/- on the appellants. The tribunal, however, reversed the penalty, finding that the demand of duty for the 14 air-conditioners was not sustainable. The tribunal upheld the appropriation of Rs. 57,960/- and Rs. 20,700/- but set aside the penalty.

Conclusion:
The tribunal upheld the appropriation of Rs. 57,960/- for the seven air-conditioners and Rs. 20,700/- for the three compressors but set aside the demand of Rs. 1,21,080/- for the 14 air-conditioners and the penalty of Rs. 25,000/-.