1986 (4) TMI 179 - AT - Central Excise

Summary

Issues Involved:
1. Applicability of concessional rate of duty.
2. Validity and applicability of show cause notices.
3. Limitation period for issuing show cause notices.
4. Interpretation of exemption notifications.

Detailed Analysis:

1. Applicability of Concessional Rate of Duty:
The core issue revolves around whether the respondent was entitled to clear goods at a concessional rate of duty (5% ad valorem) during the period from 1.7.79 to 24.7.79. The respondents cleared white printing paper during this period, but the Central Government's notification No. 236/79, which allowed the concessional rate for goods priced at Rs. 3000/- per M.T., only became effective on 25.7.79. Therefore, the respondents were liable to pay duty at 25% ad valorem for the period in question, as the wholesale price exceeded Rs. 2750/- per M.T. before the effective date of the notification.

2. Validity and Applicability of Show Cause Notices:
The respondents received a show cause notice on 29.12.79, which mentioned Rule 10 of the Central Excise Rules, 1944. Another notice was issued on 19/20.8.82 under Rule 9(2) and Section 11A of the Central Excises and Salt Act, 1944. The Tribunal noted that even if the initial notice did not specify the correct rule, it would not render the notice illegal if it was otherwise valid. The earlier notice was considered valid and in continuation of the subsequent notice.

3. Limitation Period for Issuing Show Cause Notices:
The respondents argued that the show cause notice dated 20.8.82 was time-barred. However, the Tribunal held that the earlier notice dated 29.12.79 was issued within six months from the period in question (1.7.79 to 24.7.79), thus complying with the limitation period under Rule 10. The Tribunal referenced several judgments, including those of the Bombay High Court and the Supreme Court, to support the view that a notice does not become invalid due to incorrect rule citation if it otherwise puts the recipient on notice of the demand.

4. Interpretation of Exemption Notifications:
The Tribunal emphasized that exemption notifications and statutes must be interpreted strictly. The respondents' argument that the spirit of the notification should be considered was rejected. The notification No. 236/79 was effective only from 25.7.79, and thus, any clearances made before this date could not benefit from the concessional rate. The Tribunal concluded that the respondents were liable for the differential duty amounting to Rs. 1,44,270.36.

Conclusion:
The Tribunal allowed the appeal filed by the Revenue both on merits and on the issue of limitation. The respondents were found liable to pay the differential duty for the period from 1.7.79 to 24.7.79, as they were not entitled to the concessional rate of duty during this period. The show cause notices were deemed valid, and the limitation argument raised by the respondents was dismissed.