1988 (10) TMI 158 - AT - Central Excise

Tribunal limits duty demand to 6 months, rejects 5-year claim. Specific fraud allegations required.

The Tribunal upheld the decision of the Collector of Central Excise (Appeals) to limit the duty demand to a normal period of six months, rejecting the ... Demand - Limitation Issues: Allegation of duty evasion on steel ingots rolled into bars and flats, application of duty rates, invocation of extended period for duty demand, absence of fraud or suppression allegations in the Show Cause Notice.In this case, the Department alleged that the Respondents had a stock of steel ingots on which duty had been paid at a certain rate. The Respondents rolled a portion of these ingots into bars and flats and cleared them at a lower duty rate. The Department contended that the duty should have been charged at a higher rate on the rolled products, demanding the differential duty for the period in question. The Respondents argued that there was no evidence linking the rolled products to the stock on hand, but their plea was rejected based on their raw material account showing the quantity of ingots on the specified date. The Collector of Central Excise (Appeals) upheld the duty demand but limited it to a normal period of six months, considering the facts within the knowledge of the jurisdictional officers.The Department argued that the Respondents failed to declare that the bars and flats were rolled from the stock on hand, making them liable for duty at a higher rate. They contended that the duty demand was valid for a 5-year period due to the lack of information in classification lists, gate-passes, and returns. However, upon review, it was found that the Show Cause Notice did not contain any allegations of fraud, collusion, or suppression of facts, necessary for invoking the extended period for duty demand under Rule 10(2) of the Central Excise Rules, 1944. The Tribunal noted that the relevant rules were not cited, and no specific allegations were made to justify the extended period.The Tribunal referred to previous cases where it was held that the extended 5-year period cannot be applied without allegations of fraud or suppression in the Show Cause Notice. Citing precedents such as Maharashtra Agro Industrial Development Corporation Ltd. v. Collector of Central Excise and Collector of Central Excise v. Pioneer Industries, the Tribunal emphasized the requirement of specific allegations to justify the extended period for duty demand. Consequently, the Tribunal upheld the decision of the Collector of Central Excise (Appeals) to restrict the duty demand to the normal period, finding no grounds to interfere with the order.In conclusion, the Tribunal dismissed the appeal, emphasizing the necessity of specific allegations of fraud or suppression to invoke the extended period for duty demand, as per the relevant legal provisions and established precedents.