2013 (12) TMI 1238 - HC - Central Excise

Appellant's False Declaration Upheld, Penalty Under Section 11AC Incorrect

The Tribunal upheld the appellant's declaration as false, allowing the use of Section 11A powers under the Central Excise Act, 1944. However, the penalty ... Extended period of limitation – Held that:- The Court recorded that the classification list had been approved after carrying out verification - one consignment in transit was seized when the goods were found containing labels of foreign brand - RT-12 returns were being regularly filed - there was a finding to the effect 'the invoices containing description of the goods have all been regularly approved by the Department” - all facts were within the knowledge of the Department - there was no justification for invoking the extended period of limitation. Branded and unbranded product cleared - The declaration filed with effect from 5th April, 1994 was a false declaration - The basic reason is the RG-1 register, followed by RT-12 returns, the letter of Superintendent of Central Excise dated 14th November, 1994 and the reply dated 30th November, 199 – Hence, the RG-1 register which reflects the entries in RT-12 returns, does not have basic documents to support the entries made - unless special knowledge of the appellant is inserted, it would not be possible to ascertain which customer had received the branded product and which customer received own branded/unbranded product. Issues:1. Applicability of exemption notice to the appellant for own branded and unbranded pipes and tubes.2. Validity of the power exercised under Section 11A of the Central Excise Act, 1944.3. Imposition of penalty under Section 11AC.4. Obligation of revenue to investigate aspects creating doubt.5. Interpretation of RT-12 returns and RG-1 register entries.6. Comparison with a previous Supreme Court judgment regarding justification for invoking extended period of limitation.Analysis:1. The appellant filed a declaration under Rule 173B of the Central Excise Rules concerning pipes and tubes with market buyers brand name and own brand/unbranded pipes and tubes. The exemption notice dated 28th February, 1993, applied to the appellant for own branded and unbranded products, subject to clearance not exceeding &8377; 3 crores. The appellant maintained RG-1 register and submitted RT-12 returns on time. Despite a query from the Superintendent of Central Excise regarding brand names on invoices, the appellant explained the market practice of not mentioning brand names. A subsequent raid led to the exercise of power under Section 11A of the Act. The first Appellate Authority ruled in favor of the appellant, stating that the revenue was aware of all aspects, thus questioning the extension of time under Section 11A. The Tribunal later found the original declaration false regarding brand names, allowing the use of Section 11A. However, the Tribunal deemed the penalty under Section 11AC incorrect due to its insertion post-assessment period.2. The Tribunal concluded that the appellant's declaration from April 5, 1994, was false based on discrepancies in the RG-1 register, RT-12 returns, the Superintendent's letter, and the appellant's response. The entries in the RG-1 register lacked supporting documents to identify customers receiving branded or unbranded products accurately. Consequently, the Tribunal declined to intervene, upholding the finding that the declaration was false.3. The appeal was dismissed, signifying a failure on the part of the appellant to challenge the Tribunal's decision. The Tribunal's ruling regarding the false declaration and lack of supporting documentation for the entries in the RG-1 register and RT-12 returns remained unaltered, leading to the dismissal of the appeal.This detailed analysis of the judgment addresses the issues raised in the case comprehensively, outlining the legal reasoning and conclusions reached by the court.