2001 (3) TMI 840 - AT - Central Excise

Summary

Issues:
1. Interpretation of Notification No. 162/86-C.E. for exemption on special purpose motor vehicles.
2. Applicability of duty on equipment fitted as machines on motor vehicle chassis.
3. Time-barred demand of duty and suppression of facts by the Department.

Interpretation of Notification No. 162/86-C.E.:
The Appellants claimed exemption under Notification No. 162/86-C.E. for fitting body structures on duty paid chassis for motor vehicles. They argued that equipment should be considered as machines before being mounted on the vehicle chassis. The Senior Counsel highlighted that items like water tanks, foam tanks, and lockers are not machines but parts of body building and fabrication. They contended that the Appellants complied with the conditions of the notification by not paying duty on such items. The Counsel also referenced a Board clarification stating that tanks mounted on vehicle chassis should be regarded as body fabrication. The argument focused on the definition of equipment as machines and the nature of the items in question.

Applicability of duty on equipment fitted as machines:
The Department emphasized that duty exemption under Notification No. 162/86-C.E. is subject to payment of duty on chassis and equipment used in vehicle manufacture. They argued that the Trade Notice must be read in conjunction with the notification. The Senior Counsel countered by stating that the Department was aware of the Appellants' activities and the non-payment of duty on equipment. The discussion revolved around whether the Appellants fulfilled the conditions of the notification regarding duty payment on equipment used in manufacturing special purpose vehicles.

Time-barred demand of duty and suppression of facts:
The Senior Counsel contended that the demand of duty was time-barred as the Department was informed about the Appellants' operations since 1986. They argued that there was no intention to evade duty, as evidenced by the Appellants' correspondence and classification lists submitted to the Department. The Counsel highlighted that the Department was aware of the non-payment of duty on certain equipment used in vehicle manufacturing. The judgment focused on whether the Department had prior knowledge of the duty situation and whether the demand was within the statutory time limit specified in Section 11A of the Central Excise Act.

In the final analysis, the Tribunal found merit in the Appellants' argument regarding the time-barred nature of the duty demand. They noted that the Department was aware of the Appellants' exemption claim and the non-payment of duty on certain equipment. The Tribunal concluded that the Department's knowledge of these facts precluded the invocation of the proviso to Section 11A, rendering the demand beyond the statutory time limit. Consequently, the Tribunal set aside the Order and allowed the appeal solely on the basis of the time limit aspect without delving into the substantive merits of the case.