2005 (3) TMI 240 - AT - Central Excise

Tribunal Annuls Duty Demand as Time-Barred; No Evidence of Evasion Found Due to Genuine Errors in Financial Documents.

The Tribunal set aside the impugned order and allowed the appeal, determining that the duty demand for the period 1998-99 to 2001-02 was time-barred. It ... Clandestine production and removal of the goods - Duty Demand - extended period of limitation - Proof - Suppression of production of the medicines - Penalty - discrepancies found in the balance sheets - HELD THAT:- None from the market has come forward to accept the purchase of the goods/medicines, from the appellants' company without payment of duty during these years. There is also no evidence to prove the excess receipt of inputs by the appellants' company during these years from outside. No unaccounted goods were also detected and seized from the factory of the appellants. In the absence of such an evidence, in our view, the balance sheet could not be taken as a sacrosanct documents for proving the allegations of clandestine production and removal of the goods by the appellants and thereby evasion of duty by them. Apart from this, the extended period of limitation for raising the demand from the years 1998-99 through a show cause notice dated 26-8-2003 could not be invoked. There was no suppression of material facts by the appellants as the balance sheets prepared by them were publically available documents and copies of the same were sent to the Revenue also. The duty demand raised is apparently time-barred. In this view, we are fortified by the ratio of the law laid down in the case of Hindalco Indus. Ltd., v. CCE, [2003 (3) TMI 237 - CEGAT, NEW DELHI], wherein also the demand was raised on the basis of the information appearing in the balance sheet of the assessee/company after invoking the extended period of limitation. But it was ruled that extended period could not be invoked as the balance sheets were publically available document and the demand was held to be time-barred against the assessee. The case of the appellants also stands squarely covered by this ratio of the law laid down in that case. Thus, the impugned order is set aside and the appeal of the appellants is allowed with consequential relief, if any, permissible under the law. Issues:Challenge to duty demand with penalty for the period 1998-99 to 2001-02 based on discrepancies in balance sheets and RT-12 returns.Analysis:The appellants, engaged in manufacturing Patent or Proprietary Medicaments, appealed against an order confirming duty demand with penalty for the years 1998-99 to 2001-02. The duty demand was based on discrepancies between the production shown in balance sheets and RT-12 returns. The appellants denied allegations of suppression of production, attributing discrepancies to genuine mistakes in balance sheet preparation. The adjudicating authority upheld the duty demand, prompting the appeal.The appellants argued that no tangible evidence proved suppression of production or clandestine removal of goods without duty payment. They contended that discrepancies in balance sheets and RT-12 returns were insufficient to support charges of clandestine removal. Additionally, they claimed the extended limitation period could not be invoked as balance sheets were public documents, and no information suppression occurred. Hence, they sought to set aside the impugned order on both merit and limitation grounds.Upon review, the Tribunal noted discrepancies in production figures between balance sheets and RT-12 returns. However, the adjudicating authority acknowledged genuine mistakes in balance sheet preparation, particularly for certain years where discrepancies were reconciled. The Tribunal found no evidence supporting clandestine clearance of goods without duty payment or excess receipt of inputs. It emphasized the absence of unaccounted goods or evidence from the market to substantiate evasion of duty.Regarding the extended limitation period, the Tribunal cited a precedent where demand based on balance sheet information was deemed time-barred due to the public availability of balance sheets. Applying this precedent, the Tribunal concluded that the duty demand for the appellants was also time-barred. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential relief permissible under the law.