1983 (11) TMI 284 - AT - Central Excise

Issues Involved:
1. Determination of 'base period' and 'base clearances' under Notification No. 198/76-C.E.
2. Alleged mis-statement or mis-declaration by the appellants.
3. Applicability of the extended period of limitation under Rule 10 of the Central Excise Rules, 1944.

Detailed Analysis:

1. Determination of 'base period' and 'base clearances' under Notification No. 198/76-C.E.:

The primary issue in this appeal was the determination of what could be treated as the 'base period' and 'base clearances' for the purpose of construing Notification No. 198/76-C.E. The appellants' company was manufacturing 'files' and 'rasps' since 1950, but these products were brought under excise control from 1-3-1974. The Central Government issued Notification No. 198/76-C.E. on 16-6-1976, providing concessional rates of excise duty based on 'base clearance value' determined by specific formulae in clause 2 of the Notification. The appellants assumed that since their goods became excisable from 1-3-1974, sub-clause (b) of clause 2 applied, which covered goods cleared for the first time on or after 1st April 1973. Consequently, the Assistant Collector fixed the 'base clearances value' accordingly, and a refund was granted.

However, the Department later contended that since the factory had commenced production in 1950, sub-clause (c) of clause 2 applied, which considered the year with the highest clearances during 1973-74, 1974-75, and 1975-76 as the 'base period'. The Department issued a notice to show cause, stating that the appellants had availed excess concession due to the wrong fixation of 'base clearances value'. The Assistant Collector confirmed this view, and the appeal to the Appellate Collector was dismissed, holding that the 'base clearance value' had to be determined under sub-clause (c).

2. Alleged mis-statement or mis-declaration by the appellants:

The appellants contested the notice, asserting that the 'base clearance' was correctly fixed under sub-clause (b) since their goods became excisable from 1-3-1974. They argued that the term 'specified goods' referred to 'excisable goods', and since their goods were excisable from 1-3-1974, the 'base clearance' should be determined from that date. They also contended that there was no mis-statement or mis-declaration on their part, as they had provided all necessary information to the Excise authorities, including the production start date of 1950 and the excisable date of 1-3-1974. The Assistant Collector's order confirming the notice was based on an alleged incorrect declaration, which the appellants refuted, stating that all figures and records were examined and verified by the authorities.

3. Applicability of the extended period of limitation under Rule 10 of the Central Excise Rules, 1944:

The appellants argued that even if any excess concession was allowed erroneously, the recovery could only be made within six months as per Rule 10(1) of the Central Excise Rules, 1944. They contended that the notice issued on 6-1-1979 was barred by the normal six-month period and that there were no grounds for invoking the extended five-year period under the proviso to Rule 10. The Tribunal found that the notice did not contain any specific allegation of suppression, fraud, or mis-statement, and the demand was made under Rule 10(1), which only allows a six-month period for raising a demand. The Tribunal held that the Assistant Collector and the Collector (Appeals) erred in applying the five-year period without any explicit or implied charge of mis-statement or mis-declaration in the notice.

The Tribunal observed that the appellants had been transparent in their dealings with the Excise authorities, providing all necessary information and declarations from the time Tariff Item 51-A was introduced. The Tribunal concluded that none of the circumstances justifying the extended period under Rule 10(1)(a) existed, and the demand was barred by time. Consequently, the Tribunal allowed the appeal on the ground of limitation and did not find it necessary to examine the other issues on merits.

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