2013 (9) TMI 579 - AT - Central Excise

Extended period of limitation - Demand Beyond Normal Period - wrong availment of Notification No. 6/2002 - The Commissioner has held that the wires and cables falling under Heading 85.44 were mis-declared as parts of aeroplanes and Helicopters for claiming Notification No. 6/2002 - Whether demand for the period beyond normal period can be confirmed or not in respect of clearances made under Notification No. 6/2002 - Held that - The demand for extended period cannot be sustained and appellant was not liable to any penalty being a matter of dispute and question of interpretation - the issue was the subject matter of dispute and it cannot be said that the view taken by the appellant was totally unviable and unreasonable and there were no other evidences to show that appellants deliberately misled the department or attempted to suppress the facts - it would be unfair to hold that extended period can be invoked - It was to be stated that appellant was not disputing the issue on merits and the challenge was only for invoking the extended period. They were eligible for exemption under another notification which was predecessor to Notification No. 6/2002 should be considered as a favorable point for not invoking extended period - mere interpretation of a notification in a manner beneficial to the assessee cannot be equated with the case of clandestine removal and no penalty can be imposed - appellant had no objection and had made submission that even if it was held that under Notification No. 6/2002, benefit was not available, the same can be claimed under other notifications - assessee was entitled to interpret the notification in a manner beneficial to them - it was also to be noted that in the case the goods were manufactured mainly for Public Sector units who had also given certificates stating that these items are part of Aero planes and Helicopters. This has been the viewed adversely.

Summary

Issues Involved:
1. Whether the demand for the period beyond the normal period can be confirmed for clearances made under Notification No. 6/2002.
2. Whether the extended period of limitation was rightly invoked.
3. Whether penalties on the appellant company and the Managing Director are justified.

Detailed Analysis:

1. Demand for the Period Beyond Normal Period:
The primary issue addressed was whether the demand for differential duty arising from the decision that the appellant is not eligible to clear wires and cables as parts of aeroplanes and helicopters under Notification No. 6/2002 can be confirmed for the period beyond the normal period. The Commissioner held that the appellant mis-declared wires and cables as parts of aeroplanes and helicopters and procured certificates from buyers to misguide the department. However, the appellant argued that the classification was bona fide and based on past acceptance for similar goods under Notification No. 52/94. The Tribunal found that the appellant's interpretation of the notification was not unreasonable and thus did not justify invoking the extended period.

2. Extended Period of Limitation:
The Tribunal examined whether the extended period of limitation was correctly invoked. The appellant contended that the classification of wires and cables as parts of aeroplanes and helicopters was bona fide and based on specific buyer requirements and past practices. They cited various case laws to argue that disputes involving classification do not warrant the extended period. The Tribunal agreed, noting that the appellant's actions were within the knowledge of the department and there was no deliberate attempt to mislead or suppress facts. The Tribunal referenced the decision in Mega Air Tech Engineering, which supported the view that mere interpretation of a notification in a manner beneficial to the assessee does not equate to clandestine removal. Consequently, the Tribunal held that the extended period could not be sustained.

3. Justification of Penalties:
Regarding the penalties imposed on the appellant company and the Managing Director, the Tribunal considered whether there was any contumacious conduct or specific reason for penalizing them. The Tribunal noted that the appellant acted on a bona fide belief and there was substantial confusion regarding the applicability of the notifications. Given the past acceptance of similar claims and the lack of evidence showing deliberate misguidance, the Tribunal concluded that penalties were not justified.

Conclusion:
The Tribunal held that the demand for the extended period could not be sustained and the appellant was not liable for any penalties due to the bona fide nature of the dispute and the interpretation of the notification. The appeals were disposed of accordingly.