2003 (12) TMI 229 - AT - Central Excise

Summary

Issues:
1. Availability of duty exemption for goods supplied to projects financed by the Japan Bank of International Cooperation.
2. Invocation of extended period of limitation for demanding duty.
3. Validity of the notice issued by the Joint Director instead of the Additional Director General of Central Excise Intelligence.
4. Determination of duty payable within the normal period of limitation.

Analysis:

Issue 1: Availability of duty exemption
The appellant, a manufacturer of electrical transformers, claimed duty exemption under Notification 108/95 for supplying transformers to projects financed by the Japan Bank of International Cooperation. The appellant believed in good faith that the exemption applied based on certificates provided by contractors and the Maharashtra State Electricity Board. The Tribunal considered a similar case in Danke Electricals v. CCE and held that the extended period of limitation cannot be invoked if the appellant genuinely believed in the exemption's applicability. The certificates submitted indicated project financing by the Japan Bank of International Cooperation, leading the appellant to reasonably believe in the exemption.

Issue 2: Invocation of extended period of limitation
The department demanded duty and imposed penalties on the appellant for allegedly misdeclaring the exemption's availability. The Tribunal noted that the normal period of limitation was extended to one year, and clearance beyond this period could not be subjected to duty. The appellant argued against the validity of the notice issued by the Joint Director instead of the Additional Director General, citing circulars and provisions of Section 11A of the Act. However, the Tribunal found the notice valid and confirmed the duty demand within the normal period.

Issue 3: Validity of the notice
The appellant contested the notice's validity based on the issuing authority and procedural requirements. Despite the appellant's arguments, the Tribunal upheld the notice's validity and the duty demand within the normal period. The authentication of circulars and provisions under Section 11A were considered, leading to the confirmation of duty payable within the normal period.

Issue 4: Determination of duty payable
The Tribunal set aside the penalty imposed on the appellant and its managing director, considering their bona fide belief in the exemption's applicability. The matter was remanded to the adjudicating authority solely for determining the duty payable within the normal period of limitation. The appeal was allowed to the extent of confirming duty payment within the normal period.

In conclusion, the Tribunal upheld the duty demand within the normal period, considering the appellant's genuine belief in the duty exemption's applicability. The penalty was set aside due to the appellant's bona fide actions, and the matter was remanded for the determination of duty payable within the specified period.