Full Judgment
b) The Appellants had paid differential duty on Air conditioners amounting to Rs. 4,00,147/- by debit to RG 23A part II vide entry No. 2000 dated 29/11/96 and Rs. 7,462/- towards differential duty on Water Coolers amounting to Rs. 7,462/- by debit to RG 23A part II vide entry no. 127 dated 16/1/97. They were issued Show Cause Notice dated 18.9.97.
c) The issue in this case is that the Appellants having cleared and sold Air Conditioners and Water Coolers to different customers from their branches, which were cleared on stock transfer basis, and sold from Depots at rates higher than that declared to the department.
With a deliberate and willful intent to evade duty, declared incorrect prices in respect of Air Conditioners and Water Coolers by willful suppression of fact and recovery of higher prices on Air Conditioners and Water Coolers cleared / transferred on stock transfer basis.
2. On consideration of the issues after hearing both sides, it is found - a) Depot prices, became material for payment of duty only on and from 28^th September, 1996. Therefore, no duty could have been demanded on depot sale price during the relevant period. Hence, show cause is illegal and not sustainable in law.
b) Appellants were not required to disclose to the department the prices at which the goods were sold from the depots, where goods were taken after payment of duty. Therefore, no incorrect declaration or suppression can be alleged or found relying upon, Comm of C.Ex., Ahmedabad v. Moti Laminates P. Ltd.- 1997 (96) ELT 191 Since there could have been no question of incorrect declaration or willful suppression, extended period could not have been invoked.
Show Cause notice is therefore barred by limitation.
c) During the relevant period ex-factory prices were existing and the basis of value under Section 4 even for goods sold from depots and reliance is well placed a Indian Oxygen Ltd. v. CCE -1988 (36) ELT 723 (SC) d) Following the same no demands could be confirmed in this case.
When no duty demand is sustainable, no penalty is imposable.
Therefore, imposition of penalty under Section 11AC and under Rule 173Q and interest under Section 11AB not sustainable following.
Moreover Section 11AB and Section 11AC came into effect only from 28th September, 1996. No retrospective effect can be given to these sections. Therefore, neither penalty nor interest could have been imposed under these provisions in this case. The same are set aside.
Penalty under Rule 173Q is not imposable, if the proviso to Section 11A cannot be invoked relying upon, P and B Pharma P. Ltd v. CCE - 2003 (153) ELT 14 (SC), All penalties, as imposed are to be set aside.
e) In the circumstances, the impugned order is to be set aside and the differential duty elements as appropriated is not upheld and is to be refunded as per law.