1983 (10) TMI 268 - AT - Customs

Issues Involved:
1. Applicability of Notification No. 71/78 and 80/80 for exemption.
2. Inclusion of the value of stators and rotors in the computation of total value for exemption.
3. Time bar for the demand of duty under Rule 10(a) of the Central Excise Rules, 1944.
4. Equitable application of subsequent clarifications and notifications.

Detailed Analysis:

1. Applicability of Notification No. 71/78 and 80/80 for Exemption:
The appellants are manufacturers of Electric Motors, Stators, and Rotors, which fall under Item 30 of the Central Excise Tariff. They availed of exemption under Notification No. 71/78 for the years 1978-79 and 1979-80 but did not include the value of stators and rotors in their computation. The authorities issued a show cause notice demanding duty for exceeding the exemption limit of Rs. 5 lakhs. The appellants contended that Explanation VI to Notification No. 80/80, introduced by Notification 123/80, should be deemed effective from 1-3-1978, excluding the value of stators and rotors from the computation. The Appellate Collector rejected this contention, stating that the law must be applied as it stood at the time of the issue.

2. Inclusion of the Value of Stators and Rotors in the Computation of Total Value for Exemption:
The appellants argued that the value of stators and rotors should not be included in the value of electric motors for exemption purposes, as clarified by Notification 123/80. They claimed that the Assistant Collector did not give them sufficient time to respond and that similar units were not subjected to recovery proceedings. The Appellate Collector held that the law at the time of the issue should apply, and the principle of equity does not allow retrospective application of Explanation VI. The appellants cited previous orders and notifications to support their claim that the value of stators and rotors should not be included, but the lower authorities did not accept this argument.

3. Time Bar for the Demand of Duty under Rule 10(a) of the Central Excise Rules, 1944:
The appellants contended that the demand for duty was time-barred as there was no collusion, fraud, or suppression of facts. They argued that their declaration was accepted by the Department, and the demand should be limited to six months prior to the show cause notice date, 16-5-1980. The show cause notice was issued on 15-11-1980, and the appellants argued that the demand for the period 1978-79 and up to 16-5-1980 was time-barred. The Tribunal found substance in this contention, noting that the department only became aware of the inclusion of the value of stators and rotors after the Board's clarification and that there was no willful mis-statement or suppression.

4. Equitable Application of Subsequent Clarifications and Notifications:
The appellants argued that subsequent clarifications and notifications should apply retrospectively. They cited various orders and letters from the Government of India, stating that the clarification should apply to all cases, past and present. They also pointed out that the Assistant Collector had allowed a refund of duty for a subsequent period based on the same clarification. The Tribunal noted that the Assistant Collector's order allowing a refund for a subsequent period indicated that the value of motors should not be included for earlier years. The Tribunal found no basis for the department's stand that only electric motors, stators, and rotors were involved, not mono-bloc pumps.

Conclusion:
The Tribunal concluded that the demand for duty was time-barred and that the value of stators and rotors should not be included in the computation of the total value for exemption purposes. The order of the Appellate Collector was set aside, and the appeal was allowed. The Tribunal emphasized the importance of applying clarifications and notifications equitably and retrospectively where applicable.

← Previous Next →