Dummy unit clearance through job work attracts duty, with limitation restricting demand and penalties to confirmed liability.

Evidence of an absence of premises, machinery, workers and regular records supported the conclusion that M/s. Austin was a dummy, name-lender unit and that clearances shown as job work were used to evade central excise duty. Non-compliance with Notification No. 83/94-CE was treated as substantive on the facts, so duty remained payable for the admissible period. The demand for the earlier period was barred by limitation and was restricted to the non-time-barred period from 01/04/2003. Penalty under Section 11AC was correspondingly confined to the duty confirmed, and the penalty on Smt. Helen Charles D'Silva was reduced to a commensurate amount because her role was limited to lending her name.

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Issues: (i) Whether the unit in the name of M/s. Austin was a dummy name-lender arrangement used to clear goods without payment of duty and whether duty was payable on the goods removed under the guise of job work. (ii) Whether the demand was barred by limitation for the earlier period. (iii) Whether the penalty imposed under Section 11AC on the main appellant and the penalty on Smt. Helen Charles D'Silva required reduction.

Issue (i): Whether the unit in the name of M/s. Austin was a dummy name-lender arrangement used to clear goods without payment of duty and whether duty was payable on the goods removed under the guise of job work.

Analysis: The record showed absence of premises, machinery, workers, and regular records for M/s. Austin, while the statements of the concerned persons supported the finding that no genuine job work was undertaken from that unit. Non-observance of the procedure under Notification No. 83/94-CE dated 11/04/1994 was not treated as a mere technical lapse in the facts found. The clearances were therefore held to have been effected through a dummy unit to evade central excise duty, and duty was held payable for the relevant period under the applicable notification regime.

Conclusion: The finding that M/s. Austin was a dummy unit and that duty was payable was upheld, but duty was confined to the admissible period.

Issue (ii): Whether the demand was barred by limitation for the earlier period.

Analysis: The demand covered a period beyond five years from the date of notice, and the earlier portion could not be sustained on limitation. The duty liability was therefore restricted to the period commencing from 01/04/2003.

Conclusion: The demand for the time-barred period was set aside and the liability was confined to the non-time-barred period only.

Issue (iii): Whether the penalty imposed under Section 11AC on the main appellant and the penalty on Smt. Helen Charles D'Silva required reduction.

Analysis: Since the duty was reduced to the sustainable period, the penalty under Section 11AC was correspondingly restricted. As regards Smt. Helen Charles D'Silva, the role attributed to her was limited to use of her name for the dummy unit, and no substantial active role in the evasion was established against her, warranting a reduction of penalty to a commensurate amount.

Conclusion: The penalty under Section 11AC on the main appellant was reduced to the duty confirmed, and the penalty on Smt. Helen Charles D'Silva was reduced to Rs. 2,50,000.

Final Conclusion: The duty demand was sustained only for the non-time-barred period, and the penalties were modified downward in accordance with the extent of confirmed liability and the role attributed to the co-proprietor.

Ratio Decidendi: Where the evidence establishes a dummy unit and evasion through improper job-work clearances, duty is sustainable for the non-time-barred period, and penalty must be confined to the confirmed liability and be commensurate with the proven role of the person penalised.

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