2004 (3) TMI 211 - AT - Central Excise

Summary

Issues:
1. Applicability of general exemption No. 70/77 to bunkers supplied to Coast Guard vessels.
2. Allegation of suppression of facts with intent to evade duty.
3. Interpretation of whether Coast Guard vessels are considered Naval vessels.
4. Consideration of time limitation for issuing show cause notice.

Analysis:
The case involved the appellant, a Public Sector Undertaking, supplying bunkers to Coast Guard vessels while claiming the benefit of general exemption No. 70/77 applicable to stores supplied to Naval Vessels. The show cause notice, issued alleging suppression of facts with intent to evade duty, covered the period from September 1986 to June 1990. The Coast Guard vessels, although chartered by the Indian Navy and having supply orders placed by Naval stores officers, were considered distinct from Naval vessels. The notification No. 70/77, as amended, specifically exempts stores supplied to Naval Ships, raising the question of whether Coast Guard vessels fell under this category.

During the proceedings, it was noted that the appellant's AR 4As did not clearly specify whether the vessels receiving bunkers were Naval vessels or not, despite claiming the exemption. The Tribunal deliberated on the distinction between Coast Guard and Naval vessels, ultimately concluding that the mere suppression of facts did not establish an intent to evade duty. The appellant's belief that supplying bunkers to Coast Guard vessels, at the direction of the Indian Navy, qualified for duty-free status was considered genuine. As a result, the demand was deemed time-barred, and the appeal was allowed, overturning the lower authority's decision.

The judgment underscored the importance of clarity in documentation and the necessity to establish intent when alleging duty evasion. By differentiating between Coast Guard and Naval vessels and scrutinizing the exemption criteria, the Tribunal highlighted the need for precise information to determine the applicability of duty exemptions. The decision ultimately favored the appellant, emphasizing the significance of genuine belief and the absence of concrete evidence proving an intention to evade duty in such cases.