1985 (8) TMI 198 - AT - Central Excise

Summary

Issues:
1. Classification of goods under different items of the Central Excise Tariff.
2. Liability to duty on goods cleared free of duty due to re-classification.
3. Interpretation of Section 11A regarding issuance of less charge demand.
4. Application of limitation period for issuing demand under Section 11A.
5. Effect of changed circumstances on duty liability.

Analysis:
1. The case involved a dispute regarding the classification of goods under Item 27(e) and Item 68 of the Central Excise Tariff. The re-classification of goods originally assessed under Item 27(e) under Item 68 led to a change in duty liability for goods cleared free of duty during 1981-82. The Department issued a demand seeking to recover the duty due on these goods.

2. The appellant argued that the liability to duty should be determined when the re-classification factor was determined and effective action was taken. They claimed suppression of facts by the respondent for not informing the Department about the likely re-classification. However, the respondent contended that the goods were cleared free of duty based on the accepted entitlement at that time, and the subsequent change in status did not justify the issuance of a demand.

3. The Tribunal analyzed Section 11A, which allows for the recovery of duty or other sums payable to the Government. It was noted that the provision of Section 11 did not apply to the case as the determination of payable sums was not made at the time of refunds, and the refunds were made without deduction of any sum payable to the Government. Therefore, the issuance of a less charge demand was not warranted.

4. Regarding the limitation period for issuing a demand under Section 11A, it was established that the demand must be issued within six months from the relevant date, which, in this case, was the date on which the relevant RT 12 returns were filed. The Collector (Appeals) correctly determined that the demand for clearances in January 1982 alone was enforceable due to the limitation period.

5. The Tribunal observed that specific provisions exist in the Rules/Act to modify actions based on changed circumstances, such as the proviso to Rule 56A(2) of the Central Excise Rules. The absence of such provisions in Section 11 or Section 11A was considered a deliberate omission, leading to the dismissal of the appeal.

In conclusion, the Tribunal dismissed the appeal, upholding the Collector (Appeals) decision that the demand for duty on goods cleared free of duty during 1981-82 was enforceable only for clearances in January 1982, based on the limitation period and interpretation of relevant legal provisions.