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2006 (2) TMI 379 - AT - Central ExciseValuation - Misclassification of the goods manufactured - Show cause notice issued after lapse of 21/2 years - Demand - Limitation -Adjudication proceedings - HELD THAT - As discussed from the records all the demands confirmed by the learned Adjudicating Authority are time barred. We find that in the lengthy adjudication order running to 55 pages the Adjudicating Authority in one paragraph has given a finding that the demands in Annexure D-4 to D-8 are sustainable saying that the appellants had mala fide intention and never disclosed the facts to the department. We also find that the classification of their main products under chapter 63 was earlier a subject matter of adjudication and the Asst. Commissioner after having seen the photographs and other documents approved the classification under chapter 63. The decision of the Asst. Commissioner in his order 16-1-1996 has not been questioned by the higher authorities. The allegation of the DGCEI in the Show Cause Notice to the effect that the appellants mis represented the facts for getting the approval of classification claimed by them has no much basis. Thus we find that the demand confirmed in respect of Annexures D-4 D-5 D-7 and D-8 is not at all sustainable. It is liable to the set aside. In that case no penalties can be levied. Hence we allow the appeals with consequential relief.
Issues Involved:
1. Classification of goods and evasion of Central Excise duty. 2. Time-barred demands and invocation of the extended period under Section 11A(1) of the CE Act 1944. 3. Legitimacy of penalties imposed under Section 11AC and Rule 209A of the CE Rules. 4. Marketability and excisability of goods. 5. Alleged mis-declaration and suppression of facts. Detailed Analysis: 1. Classification of Goods and Evasion of Central Excise Duty: The primary issue revolves around the classification of backlit sign boards, signages, and awnings manufactured by the appellant, M/s. VCPL. The Director General of Central Excise Intelligence (DGCEI) alleged that the appellant misclassified these goods to evade duty. The appellant contended that their goods were classified under heading 63.06 as awnings by the Assistant Commissioner, which was accepted by the Commissioner upon review. However, the DGCEI proposed a different classification under Sl. No. 94.05. The Tribunal found that the classification dispute indicated a bona fide issue rather than an intentional misclassification to evade duty. 2. Time-Barred Demands and Invocation of Extended Period: The Adjudicating Authority dropped the demands in Annexures D-1, D-2, and D-3, deeming them time-barred. However, it upheld the demands in Annexures D-4 to D-8, invoking the extended period under Section 11A(1) due to alleged suppression of facts. The Tribunal examined each demand: - Annexure D-4: The demand of Rs. 53,216/- for adhesive vinyl stickers/graphics was found time-barred as the debit notes were handed over to the officers post-search, and the Show Cause Notice was issued after a significant delay. - Annexure D-5: The demand of Rs. 10,88,602/- for fascia was dismissed as the adjudication went beyond the scope of the Show Cause Notice, classifying the item under a different chapter. - Annexure D-6: The demand of Rs. 2,319/- was accepted by the appellant and debited to the government. - Annexure D-7: The demand of Rs. 6,20,268/- for fascia supplied by Autographics and Visual Display Systems was deemed time-barred, with the Tribunal noting the lack of marketability and the belated Show Cause Notice. - Annexure D-8: The demand of Rs. 5,05,564/- for goods removed under Vivek Trading Company invoices was also found time-barred, with the Tribunal recognizing the job work arrangement and SSI exemption. 3. Legitimacy of Penalties Imposed: The Commissioner imposed penalties under Section 11AC and Rule 209A on various individuals associated with M/s. VCPL. Given the Tribunal's finding that the demands were time-barred and not sustainable, the penalties were also deemed unsustainable. The penalties included: - Rs. 1,00,000/- each on the Managing Director and Executive Director. - Rs. 50,000/- on the Chief Finance & Admin Officer. 4. Marketability and Excisability of Goods: The Tribunal addressed the issue of marketability concerning the fascia supplied by Autographics and Visual Display Systems. It concluded that these goods were not marketable as they could not be dismantled and sold or reassembled at another site, thus not meeting the criteria for excisability. 5. Alleged Mis-Declaration and Suppression of Facts: The Tribunal found no basis for the DGCEI's allegation of misrepresentation and suppression of facts. It noted that the classification under chapter 63 had been previously adjudicated and accepted without challenge from higher authorities. The Tribunal emphasized that different interpretations of classification could not justify the invocation of the extended period for suppression of facts. Conclusion: The Tribunal concluded that all demands confirmed by the Adjudicating Authority were time-barred and unsustainable. Consequently, the penalties imposed were also set aside. The appeals were allowed, providing consequential relief to the appellants.
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