1983 (5) TMI 229 - AT - Central Excise

Summary

Issues Involved:
1. Limitation period for demand of duty.
2. Exemption for textile machinery parts manufactured without the aid of power.
3. Exclusion of nickel scrap sale from total clearances.

Detailed Analysis:

1. Limitation Period for Demand of Duty:

The appellants argued that the Collector's finding of wilful suppression of facts and evasion of duty was incorrect, and therefore, the extended time limit of 5 years for demand of duty should not apply. They contended that the normal time limit of six months should apply since the show cause notice was issued on 16-5-1981. They explained that their misunderstanding regarding the duty-free status of their pre-Budget stocks was based on verbal confirmation from their Central Excise Officer. However, the Department's representative countered that there was no evidence of such disclosure or approval from the Department. The Tribunal concluded that there was no documentary or circumstantial evidence to support the appellants' claim of implied approval by the Department. Consequently, the extended limitation period of 5 years was applicable due to the appellants' wilful suppression of facts and intentional evasion of duty.

2. Exemption for Textile Machinery Parts Manufactured Without the Aid of Power:

The appellants claimed that textile machinery parts worth Rs. 9,45,360/- should be excluded from the total clearances of 1979-80 as they were manufactured without the aid of power. The Tribunal found it difficult to examine the merits of this plea since the appellants did not present any records to substantiate their claim. Given the absence of documentary evidence, it was impossible to verify whether these parts were indeed manufactured manually. Therefore, the Tribunal found no merit in this plea and rejected it.

3. Exclusion of Nickel Scrap Sale from Total Clearances:

The appellants argued that a small quantity of nickel scrap valued at Rs. 18,875/- sold on 8-8-1979 should be excluded from the total clearances of 1979-80. Despite the lack of evidence from the appellants, the Tribunal agreed with this plea. It reasoned that the appellants were primarily manufacturing textile machinery parts, and the nickel scrap likely resulted from duty-paid nickel purchased externally. Consequently, the Tribunal directed that this sale be excluded from the clearances of 1979-80, reducing the corresponding duty demand for that year.

Conclusion:

The Tribunal upheld the Collector's findings regarding the extended limitation period due to wilful suppression of facts and the inapplicability of the claimed exemption for textile machinery parts. However, it granted relief concerning the exclusion of the nickel scrap sale from the total clearances. The appeal was largely rejected except for the minor relief granted for the nickel scrap sale. The fine of Rs. 20,000/- in lieu of confiscation and the penalty of Rs. 6 lakhs were deemed justified and not excessive given the circumstances.