1986 (1) TMI 222 - AT - Central Excise

Summary

Issues:
1. Validity of proceedings under repealed rule.
2. Period for which duty demand could be raised.
3. Allegations of fraud and suppression of facts.
4. Application of extended period of limitation.
5. Replacement of show cause notice and period of demand.

Analysis:

Issue 1: Validity of proceedings under repealed rule
The appellant argued that the proceedings initiated under Rule 10, which was repealed, were invalid. However, citing precedent, the Tribunal held that proceedings initiated under a valid rule could continue despite its repeal. The appellant's contention was dismissed based on the precedent set by a previous judgment.

Issue 2: Period for which duty demand could be raised
The appellant contended that duty demand could only be made for a normal period of six months, not an extended period. The appellant claimed he acquired the powerlooms in good faith and only discovered the forged permit later. The Tribunal noted the absence of an application under Rule 96-I but acknowledged the appellant's argument regarding the period for duty demand.

Issue 3: Allegations of fraud and suppression of facts
The respondent argued that the appellant participated in fraud related to the forged permit and disposal of powerlooms. However, the Tribunal found circumstances indicating the appellant's honest belief in the genuineness of the permit. The lower authorities' conclusion of a conspiracy to defraud the government was questioned based on the circumstances of the case.

Issue 4: Application of extended period of limitation
The Tribunal concluded that the extended period of limitation should not be applied in this case. It found no intent to evade duty on the appellant's part and limited the demand to six months preceding the show cause notice date.

Issue 5: Replacement of show cause notice and period of demand
The Tribunal noted the replacement of the original show cause notice with a fresh one in 1980. It determined that duty demand beyond six months preceding the new notice date was not recoverable. Consequently, the appeal was allowed, and the lower authorities' duty demands were set aside based on the findings of the Tribunal.