V.T. Raghavachari, Member (J) - (1.) UNDER notice dated 15-3-1980 the appellants M/s. Vishwa Industrial Works were intimated hat they had manufactured and cleared, from their unlicensed factory premises, goods falling under item 51A CET (Screw drivers and line testers) during the period 1-4-1978 to 31-3-1979 and upto 10-4-1979, and that they had not observed the relevant Central Excise formalities in connection herewith such as filing classification list, price list etc. and action was therefore proposed to be taken to recover from them, under Rule 9(2) read with Rule 10(1) of Central Excise Rules, duty on the said goods as indicated in the annexure to the notice and also to levy a penalty. The appellants replied. After adjudication the Additional Collector of Central Excise, Bombay under his order dated 29-6-1982 confirmed the demand on goods valued Rs. 2,31,938.13P cleared during the abovesaid period and further imposed a penalty of Rs. 40,000/-. It is against the said order that this appeal has been preferred.
(2.) The appellants had indicated under letter dated 28-7-1987 that they would not be appearing in person and that the appeal may be disposed of with reference to their appeal petition as also submissions made in the said letter. None appeared for the appellants during the hearing. We have heard Shri Vineet Kumar for the department and have perused the records. It is mentioned in the appeal that when the goods in question became liable for payment of Central Excise duty from 18-6-1977, the appellants applied for and obtained licence for such manufacture but that since under Notification No. 241/77 the goods became free of duty (depending on the quantum of clearance) the appellants took no further steps to observe the necessary Central Excise formalities. They admit in the appeal that the situation changed on the issue of notification No. 71/78 dated 1-3-1978 but claim that the appellants were unfortunately unaware of the same. According to them they became aware of this change only when a survey was conducted by the Department in April 1979 and in connection therewith they furnished all the necessary figures under their letter dated 4-4-1979. It is subsequent thereto that the show cause notice dated 15-3-1980 had been issued with reference to manufacure and clearance on and after 1-4-1978.
(3.) THE first contention for the appellants is that the show cause notice is barred by time since it had been issued more than 6 months fter 4-4-1979 when all the facts were disclosed to the department. On the other hand the case for the department is that since the necessary figures were not furnished to the department this is a case of wilful suppression of facts and the department is therefore entitled to a period of 5 years in enforcing the demand and hence the entire period is within time. It appears to us that neither contention is fully correct. THE show cause notice had been issued on 15-3-1980 and would be governed by the provisions of Rule 10 as it stood that day, the provisions of Section 11A not having coming into force by then. Under the provisions of Rule 10 the Deptt. had a period of 6 months from the relevant date for issuing any demand for duty not levied, the period extending to 5 years where the non-levy was by reason of fraud, collusion on any wilful mis-statement or suppression of facts on the part of the assessee or his agent. It is admitted for the appellants that they had been manufacturing and removing the goods without observing the necessary formalities and that the figures necessary for finding out their eligibility for exemption were furnished on 4-4-1979 only. THEre is no dispute that on such figures their eligibility for exemption was rightly denied. That means that till 4-4-1979 the appellants had wilfully suppressed the necessary facts from the department and had been manufacturing and removing the goods without payment of duty by reason of such suppression. This would therefore mean that in respect of duty payable on the manufacture and clearances till 4-4-1979 the Deptt. had a period of 5 years for enforcing the demand for recovery thereol. Hence the appellants are not correct in contending that in respect of duty payable till 4-4-1979 the Deptt. was liable to issue the necessary demand within 6 months from 4-4-1979, whether or not the period of 5 years from the relevant dates had expired.;