2008 (5) TMI 231 - AT - Central Excise

Limitation period bars demand in Show Cause Notice; penalty sustained for uncontested amounts.

KALPANA LAMPS & COMPONENTS LTD. Versus COMMR. OF C. EX., CHENNAI

The Tribunal held that the demand in the Show Cause Notice dated 5-4-2000 was barred by limitation, leading to the vacation of the demand and penalty ... Plea of limitation - demand on account of inadmissible credit availed by the appellant - credit availed of duty paid on damaged glass shells (inputs) - Show Cause notice dated 5-4-2000 to demand irregular credit availed prior to 16-7-98, is barred by limitation, as all the material facts were within the knowledge of the department and there was no justification to allege suppression – therefore, demand and equal amount of penalty imposed u/r 57-I are vacated Issues:1. Jurisdiction of the Range Superintendent regarding irregular credit availed by the appellant.2. Barred by limitation: Show Cause Notice dated 5-4-2000 invoking the extended period to demand an amount of Rs. 1,61,079.3. Decision on Show Cause Notice dated 19-10-2000 and penalty imposed.4. Validity of the demand and penalty imposed under Rule 57-I.Analysis:Issue 1: Jurisdiction of the Range SuperintendentThe appellant argued that the jurisdictional Range Superintendent was aware of the irregular credit involved in the Show Cause Notice dated 5-4-2000 as early as 16-7-98. The appellant contended that since all material facts were within the knowledge of the department, there was no justification for invoking the extended period of limitation. The appellant relied on the judgment in Pahwa Chemicals Private Limited v. CCE, Delhi to support the plea of limitation. The Tribunal found merit in the appellant's argument and held that the demand made in the Notice dated 5-4-2000 was barred by limitation.Issue 2: Barred by LimitationThe Tribunal, after considering the case records and submissions, agreed with the appellant's contention that the demand of Rs. 1,61,079 made in the Notice dated 5-4-2000 was indeed barred by limitation. The Tribunal noted that the authorities had collected information regarding the irregular credit availed by the appellant prior to 16-7-98. Therefore, the Tribunal vacated the demand of Rs. 1,61,079 and the penalty imposed under Rule 57-I.Issue 3: Decision on Show Cause Notice dated 19-10-2000 and Penalty ImposedThe appellant withdrew the challenge to the Show Cause Notice dated 19-10-2000, which raised a demand of Rs. 1,39,259 and imposed a penalty of Rs. 25,000. The Tribunal sustained the order regarding this Show Cause Notice and penalty as the appellant did not contest the demand and penalty.Issue 4: Validity of Demand and Penalty Imposed under Rule 57-IAfter careful consideration, the Tribunal upheld the demand of Rs. 1,39,259 and the penalty of Rs. 25,000 imposed under Rule 57-I, as the appellant did not contest these amounts. The Tribunal disposed of the appeal accordingly, maintaining the decision on the Show Cause Notice dated 19-10-2000 and the associated penalty.In conclusion, the Tribunal found that the demand made in the Show Cause Notice dated 5-4-2000 was barred by limitation, leading to the vacation of the demand and penalty imposed under Rule 57-I. The decision on the Show Cause Notice dated 19-10-2000 and the penalty imposed under Rule 173Q was sustained as the appellant did not contest these amounts.