2001 (5) TMI 788 - AT - Central Excise

Summary

Issues:
1. Waiver of deposit of duty and penalty under Section 11AC of the Act.
2. Eligibility for exemption under Notification 108/95.
3. Invocation of extended period under Section 11A of the Act.
4. Knowledge of loan closure by the manufacturer.
5. Limitation period for duty demand and penalty imposition.

Analysis:

1. The manufacturer was awarded a contract by MSEB for a project funded by the World Bank, exempting goods supplied to such projects under Notification 108/95. The manufacturer cleared consignments without duty payment based on this notification between June 1998 and December 1999.

2. The World Bank suspended the loan to MSEB by October 1996, leading to subsequent developments between the Indian and Maharashtra governments. The department issued a notice in 2000 demanding duty on clearances, stating the project was no longer World Bank-funded. The Commissioner confirmed the duty demand and imposed penalties.

3. The manufacturer argued against the extended limitation period, claiming ignorance of the loan closure until a visit in December 1999. The Tribunal found the Commissioner's basis for invoking the extended period unclear and accepted a deposit offer of Rs. 25 lakhs to waive the remaining duty and penalties.

4. The Tribunal vacated an order detaining goods for recovery of the demanded amount. The decision highlighted the lack of clear evidence indicating the manufacturer's knowledge of the loan's closure, leading to a waiver of the remaining duty and penalties upon the deposit made.

5. The judgment focused on the manufacturer's awareness of the loan status, the invocation of the extended limitation period, and the subsequent waiver of duty and penalties upon a deposit offer. The Tribunal's decision emphasized the need for clear evidence to establish knowledge for invoking extended periods under the Act and highlighted the importance of timely compliance and deposit in such cases.