2005 (11) TMI 316 - AT - Central Excise

Tribunal dismisses Revenue's appeal on duty demands & penalties under Notification No. 1/93

The Tribunal dismissed the Revenue's appeal against an assessee for duty demands and penalties under Notification No. 1/93. The Commissioner (Appeals) ... Demand - Limitation - Bona fide belief Issues:Assessee's mistaken classification of excisable product for duty calculation under Notification No. 1/93, Commissioner (Appeals) dropping proceedings due to bona fide belief, Ignorance of law by both assessee and departmental officers affecting duty demands and penalty imposition, Challenge to the limitation period for duty demands and penalty.Analysis:The judgment pertains to an appeal filed by the Revenue against an assessee availing benefits under Notification No. 1/93 for the period from 1993-94 to July 1996. The assessee was found manufacturing Pulverized Powder used in the factory for making storage tanks, which was excisable but not declared for duty calculation under the notification. The Commissioner (Appeals) noted the assessee's mistaken belief in excluding the value of the powder from duty computation and held that the department was aware of the production. Consequently, the Commissioner concluded that the demand for duty beyond the normal limitation period could not be sustained due to mutual ignorance of provisions, leading to the setting aside of duty demands and penalties based on limitation grounds.Upon reviewing the grounds of appeal, the Tribunal observed that there was no challenge to the Commissioner's findings regarding the non-applicability of the extended limitation period under Section 11A. The Tribunal emphasized that ignorance of the law, whether by the assessee or departmental officers, cannot serve as an excuse for delays in issuing duty demands. Consequently, the Tribunal upheld the Commissioner's decision that duty demands up to July 1996, issued in 1998, were time-barred. As the duty demands were not upheld, the Tribunal found no justification for upholding the penalties, leading to the rejection of the appeal based on the above considerations.In conclusion, the Tribunal rejected the appeal in light of the findings that ignorance of the law, both by the assessee and departmental officers, cannot be used as a valid excuse for delays in issuing duty demands, ultimately leading to the dismissal of the appeal against the Commissioner's decision on limitation grounds.