1984 (10) TMI 145 - AT - Central Excise

Appeal partially allowed, duty demand limited to 6 months pre-Notice, penalty set aside.

The Tribunal partially allowed the appeal, limiting the duty demand to six months before the Show Cause Notice and setting aside the penalty. The ... Demand notice - Limitation Issues:1. Whether the Central Excise Duty demanded from the appellants is time-barred.2. Whether the penalty imposed on the appellants is justified.Analysis:1. The appellants were manufacturing various goods and availing exemption up to a certain value under a specific notification. The proceedings against them began after a surprise visit by the Anti-Evasion Staff, revealing non-maintenance of production or clearance records. A Show Cause Notice was issued, and subsequently, Central Excise duty was demanded along with a penalty. The appellants denied the allegations, but the Additional Collector upheld the demand and penalty. The appellants did not contest the classification of goods during the appeal.2. The appellants argued that the demand and penalty should be limited to a shorter period preceding the Show Cause Notice, citing Section 11A of the Central Excises and Salt Act, 1944. They had previously filed a declaration claiming exemption, indicating the manufacturing process. The Tribunal noted that the Department was aware of the production process, and there was no suppression of facts or fraud. Therefore, the demand was restricted to six months before the Show Cause Notice, not the usual five-year period. Regarding the penalty, the Tribunal found no justification for its imposition, considering the circumstances. The retrospective amendment in Rule 9(2) of the Central Excise Rules was deemed inapplicable for past penalties. Consequently, the demand beyond the specified period was set aside, and the penalty was also annulled.In conclusion, the Tribunal partially allowed the appeal, limiting the duty demand and setting aside the penalty based on the lack of grounds for penalty imposition and the Department's awareness of the manufacturing process.