1997 (3) TMI 258 - AT - Central Excise

Tribunal overturns penalty and demand due to lack of evidence, citing time-barred notice.

The Tribunal ruled in favor of the appellant, setting aside the demand of Rs. 3,54,902.85 and a personal penalty of Rs. 75,000 imposed by the Collector, ... Demand - Limitation Issues involved: Confirmation of demand and imposition of personal penalty by Collector, Central Excise, based on alleged clandestine production and removal of MS ingots/steel castings, and the question of limitation regarding the demand period.Confirmation of Demand and Imposition of Penalty:The appellant challenged the demand of Rs. 3,54,902.85 and a personal penalty of Rs. 75,000 imposed by the Collector, Central Excise. The case arose from an audit memo regarding the manufacture of M.S. ingots and steel castings. The appellant argued that no norms were fixed for their factory, and the recovery of metal from scrap and other inputs varies based on manufacturing process, labor efficiency, and raw material quality. The appellant contended that the department failed to provide evidence of additional production or removal of goods without duty payment. Citing legal precedents, the appellant argued against determining duty based on conjectures and surmises. The appellant also asserted that there was no suppression or misstatement, as returns showing raw material procurement and production were regularly submitted. The appellant claimed the demand was time-barred as the show cause notice was issued beyond the limitation period.Alleged Clandestine Production and Removal:The Director of Inspection, Customs and Central Excise had set a norm of 87% recovery of metal from scrap for steel ingots manufacture. The respondent argued that even at the lowest recovery rate of 87%, the recorded production was significantly lower than expected based on the norm. However, no evidence was presented to prove the alleged excess production of MS ingots/steel castings. The Tribunal noted that no norms were established for the appellant's factory, emphasizing that metal recovery depends on various factors. The Tribunal found no evidence to support the claim of clandestine production and removal of 849.364 MTs of MS ingots/steel castings, stating that the case was built on presumption and surmises. Consequently, the Tribunal held that the department failed to prove the clandestine production/removal allegations.Limitation Period:The appellant's submission of raw material and production returns regularly indicated no suppression or misstatement. The Tribunal concluded that the demand was beyond the six-month limitation period, rendering it time-barred. Consequently, the Tribunal ruled in favor of the appellant on both the merits of the case and the limitation issue, setting aside the impugned order and allowing the appeal. Any consequential relief was deemed admissible to the appellants as per the law.