2011 (9) TMI 856 - AT - Central Excise

Waiver of pre-deposit and stay of recovery - Duty demand on dumpers manufactured and supplied by the assessee to a construction company for execution of a World Bank-funded project - Bar of limitation - Held that - at the time of clearance of the goods, the appellant was eligible for exemption under Notification No. 108/95-C.E., ibid. The assessee, apparently, had no doubt regarding their eligibility. The show-cause notice was issued in the light of the aforesaid amendment brought to the said notification on 1-3-2008. This show-cause notice, however, did not allege that the withdrawal/diversion of the dumpers by the construction company upon completion of the project was with the knowledge or consent of the assessee. The only allegation in the show-cause notice was to the effect that the assessee should have taken necessary steps to ensure that the dumpers were not diverted/withdrawn from the project site upon completion of the project. We are afraid, this allegation would not constitute any of the grounds/ingredients embodied in the proviso to Section 11A(1) of the Central Excise Act for invocation of the extended period of limitation. Prima facie, the demand of duty is time-barred. In this view of the matter, we grant waiver of pre-deposit and stay of recovery in respect of the dues adjudged against the appellant - Decided in favour of assessee.

Summary

Issues:
1. Waiver of pre-deposit and stay of recovery sought by the appellant in relation to duty and penalty.
2. Interpretation of Notification No. 108/95-C.E. granting exemption from duty for goods supplied for World Bank-funded projects.
3. Allegations of duty liability due to withdrawal of goods by the construction company post-project completion.
4. Consideration of time-bar plea by the assessee regarding the issuance of the show-cause notice.

Analysis:
The appellant filed an application seeking waiver of pre-deposit and stay of recovery for duty and penalty amounting to Rs. 63,49,514/- each. The duty demand was related to dumpers supplied for a World Bank-funded project under Notification No. 108/95-C.E. exempting duty for such projects upon fulfilling specific conditions. The clearance of dumpers without duty payment occurred during 2004-05. Subsequently, a show-cause notice was issued in 2009 post-amendment to the notification, alleging duty liability due to the withdrawal of dumpers by the construction company for use elsewhere after project completion. The notice invoked an extended limitation period, leading to duty demand and penalty imposition by the adjudicating Commissioner.

Upon hearing arguments, the Tribunal considered the time-bar plea raised by the assessee. It was noted that the show-cause notice did not assert the appellant's knowledge or consent regarding the withdrawal of dumpers by the construction company post-project completion. The notice merely alleged that the appellant should have ensured the dumpers were not diverted. The Tribunal opined that this allegation did not meet the criteria under Section 11A(1) of the Central Excise Act for invoking the extended limitation period. Consequently, the demand of duty was deemed time-barred, leading to the grant of waiver of pre-deposit and stay of recovery for the dues adjudged against the appellant.

In summary, the Tribunal ruled in favor of the appellant, granting waiver of pre-deposit and stay of recovery as the demand of duty was considered time-barred due to the lack of specific grounds for invoking the extended limitation period. The judgment emphasized the importance of meeting legal criteria for duty liability allegations and upheld the appellant's plea in this case.