1991 (11) TMI 70 - HC - Central Excise

Summary

Issues:
1. Classification of carbon paper under Tariff Item 17(2) of the Central Excise Tariff.
2. Applicability of limitation under Sec. 11A of the Central Excise Act, 1944.
3. Validity of proceedings due to incorrect reference to Rule 10 of the Central Excise Rules.

Analysis:
1. The appellant, a small-scale industry manufacturing carbon sheets, challenged the classification of carbon paper under Tariff Item 17(2) of the Central Excise Tariff. The Superintendent of Central Excise issued a notice demanding excise duty, which was confirmed in the final order. The appellant contended that carbon paper does not fall under Tariff Item 17(2). The single Judge ruled in favor of the Revenue, citing previous decisions. The appellant appealed, raising the issue of limitation under Sec. 11A of the Act and jurisdiction due to the absence of Rule 10 of the Central Excise Rules at the time of the show cause notice.

2. The Supreme Court precedent in Collector of Central Excise v. Krishna Carbon Paper Co. established that carbon paper falls under Tariff Item 17(2) post the 1976 amendment. The appellant argued the incorrect reference to Rule 10 of the Central Excise Rules and raised the issue of limitation under Sec. 11A. The Court noted that Sec. 11A replaced Rule 10 from 17-11-1980, rendering the reference to Rule 10 in the show cause notice a mistake. The Court emphasized the importance of the limitation prescribed in Sec. 11A and remanded the matter to the 2nd respondent to consider the plea of limitation and decide if the demand for excise duty falls within the prescribed time.

3. The Court set aside the order dated 6-6-1981 and allowed the appellant to provide a fresh explanation to the show cause notice. The 2nd respondent was directed to assess the plea of limitation under Sec. 11A and the Proviso to determine the validity of the excise duty demand. The Court acknowledged the delay in the resolution of the matter since 1981 and opted not to deny relief based on the alternative remedy of filing an appeal. The judgment emphasized safeguarding the interests of both the assessee and the revenue, citing a previous case for reference.

This comprehensive analysis addresses the classification of carbon paper, the application of limitation under Sec. 11A, and the validity of proceedings due to an incorrect reference to Rule 10, providing a detailed overview of the judgment's key aspects and legal considerations.