1985 (11) TMI 59 - HC - Central Excise

Summary

Issues:
1. Exemption from Excise duty under Notification No. 31/66 for trailers manufactured by the petitioner.
2. Determination of the number of workers employed in the factory for the purpose of exemption eligibility.
3. Disagreement over the liability to pay duty on clearances made between 1-11-1969 and 14-5-1976.
4. Appeal against the order of the Asst. Collector to levy duty.
5. Interpretation of relevant legal provisions and Supreme Court decisions.
6. Challenge to the appellate order on grounds of employment count and limitation period for demand.

Detailed Analysis:
1. The petitioner, a trailer manufacturer, claimed exemption from Excise duty under Notification No. 31/66 but was later found ineligible. A show-cause notice was issued proposing duty levy on clearances made during 1-11-1969 to 14-5-1976 based on false declarations.
2. The exemption under Notification No. 31/66 required the factory to employ less than five workers for trailers' duty exemption. The petitioner argued that the sales unit employees should not be considered, but the Asst. Collector disagreed, relying on reports showing more than five workers employed.
3. The Asst. Collector's order held the petitioner liable for duty based on reports indicating employment of more than five workers during the relevant period, leading to a demand for payment.
4. The petitioner appealed to the Appellate Collector, who upheld the original authority's decision, emphasizing the inapplicability of certain Supreme Court decisions cited by the petitioner.
5. Legal arguments included references to Supreme Court decisions like A.K. Roy v. Voltas Limited and M/s. Rohtas Industries v. Ramlakhan Singh, interpreting the value determination principles for Excise duty assessment.
6. The petitioner challenged the appellate order on grounds of employment count and limitation period applicability, citing discrepancies in the project report dates and legal provisions like Rules 9 and 173(Q) of the Central Excise Rules, 1944.
7. The court considered the factual findings of the department regarding the employment count, rejecting the petitioner's argument to treat sales section staff separately for duty calculation purposes.
8. The court also addressed the limitation issue, upholding the validity of the duty levy action under Rule 10A, emphasizing the department's authority to make demands in unforeseen circumstances not covered by specific rules.
9. The court partially allowed the writ petition, setting aside the demand for the years 1969 and 1970 pending clarification on the project report filing date, while affirming the duty liability for the remaining period.