1984 (6) TMI 263 - AT - Central Excise

Issues Involved:
1. Entitlement to rebate for sugar exported during the period 1-5-1978 to 15-8-1978.
2. Whether the demand for payment of duty is barred by limitation.
3. Applicability of Notification No. 108/78 in granting rebate.
4. Interpretation of "leviability" vs. "payability" of duty.
5. Whether the quantity exported should be considered for rebate.
6. Extended time limit under Section 11A due to suppression of relevant information.

Detailed Analysis:

1. Entitlement to Rebate for Sugar Exported:
The Company claimed a rebate for sugar exported during the period 1-5-1978 to 15-8-1978. The Assistant Collector rejected this claim, and the Collector (Appeals) upheld the rejection. The Company argued that rebate is due for the exported sugar based on Notification No. 108/78, which should apply to the quantity exported as well as the excess production.

2. Demand for Payment of Duty Barred by Limitation:
The Collector (Appeals) found that the demand for payment of duty amounting to Rs. 22,219.37 was barred by limitation since the show cause notice was issued on 17-2-1981, well beyond the prescribed period. However, the Collector of Central Excise, Madras, disputed this finding, arguing that the fact of export was not disclosed initially, justifying the extended time limit under Section 11A.

3. Applicability of Notification No. 108/78:
The Company argued that Notification No. 108/78, which provides for exemption of duty on excess production, should apply to the exported sugar. They contended that the absence of a proviso limiting the concession to the amount of duty payable in Notification No. 108/78 implies that the rebate should not be limited.

4. Interpretation of "Leviability" vs. "Payability" of Duty:
The Company argued that the distinction between "leviability" and "payability" of duty should be considered. They cited the Supreme Court judgment in N.B. Sanjana v. The Elphinstone Spinning and Weaving Mills Co. Ltd., which differentiated between the levy and collection of duty. The Company claimed that even if the duty was not actually paid, the legal liability to pay should be considered as payment for the purposes of rebate.

5. Quantity Exported Considered for Rebate:
The Company claimed that the exported quantity should be eligible for rebate. They argued that the quantity exported could not be definitively established as coming from normal or excess production. As an alternative, they suggested dividing the exported quantity proportionately between normal and excess production for rebate purposes.

6. Extended Time Limit Under Section 11A:
The Senior Departmental Representative argued that the extended time limit under Section 11A was applicable due to the suppression of relevant information by the Company. The fact that the goods were exported was not disclosed initially, altering the claim for refund.

Tribunal's Findings:

1. Rebate Claim Not Maintainable: The Tribunal held that the claim for rebate on the exported sugar was not maintainable. It emphasized that the quantum of relief available cannot exceed the actual duty leviable on the sugar at the time of clearance from the factory, whether for home consumption or export.

2. Leviability vs. Payability: The Tribunal rejected the Company's argument distinguishing between "leviability" and "payability" of duty. It stated that there was no actual payment of duty at the time of removal of goods under Rule 13, and executing a bond does not equate to the discharge of the duty burden.

3. Notification No. 108/78 Interpretation: The Tribunal followed its previous decision in Order-in-Appeal No. ED (MAS) 6/82, interpreting that the notification under Rule 8(1) applies to situations where goods are cleared on payment of actual duty, not on goods exported under bond without duty payment.

4. Extended Time Limit Justified: The Tribunal upheld the extended time limit under Section 11A, agreeing that there was suppression of relevant information regarding the export of goods, justifying the extended period for the demand.

5. Proportional Division of Exported Quantity Rejected: The Tribunal rejected the plea to proportionately divide the exported quantity for rebate purposes, noting that the finding of fact that the exported quantity came from excess production was not challenged in the lower forums.

Conclusion:
The appeal of the Company was dismissed, and the Cross Objection of the Collector of Central Excise was upheld. The order of the Collector (Appeals) was set aside, and the order of the Assistant Collector of Central Excise was restored. The Company was directed to pay the demanded amount within 30 days.

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