1986 (7) TMI 275 - AT - Central Excise

Summary

Issues:
1. Whether the demand made on the appellant invoking the extended period of limitation is legally valid.
2. Whether the appellant is guilty of suppression of facts within the meaning of Section 11A(1) of the Central Excises and Salt Act, 1944.
3. Whether the Department had knowledge of the raw materials used by the appellant in the manufacture of finished products.

Analysis:

1. The appeal challenged a demand raised on the appellant for a duty amount due for clearances between June 1980 to August 1982. The key issue was the validity of invoking the extended period of limitation under Section 11A(1) of the Act. Both the original authority and the lower appellate authority found the appellant guilty of suppression of facts related to raw materials used in manufacturing excisable goods. The Department claimed that the appellant cleared goods without paying duty under an exemption notification, although certain raw materials were excluded from this exemption. The appellant argued that the Department's claim was time-barred as they had knowledge of the raw materials used. The Tribunal found that the Department's claim was barred by limitation, as the raw materials register and audit report indicated the Department's knowledge of the raw materials used.

2. The appellant contended that the Department knew about the raw materials used in manufacturing finished products, as evidenced by the raw materials register and audit report. The Department argued that the appellant suppressed facts by not furnishing details of principal raw materials in the classification list, as required under Rule 173D. The Tribunal analyzed the evidence and concluded that the appellant's use of raw materials was known to the Department, and therefore, the allegation of suppression of facts under Section 11A(1) was not legally tenable. The Tribunal set aside the impugned order and allowed the appeal.

3. The Departmental Representative argued that the appellant failed to furnish information regarding principal raw materials as required under Rule 173D, indicating suppression of facts. However, the Tribunal noted that the obligation to provide such information arises only if required by the Collector, and in this case, no such requirement was made. The Tribunal found that the Department had knowledge of the raw materials used by the appellant, as evidenced by the raw materials register and audit report. Therefore, the Tribunal held that the Department's claim based on suppression of facts was not valid, leading to the decision to set aside the impugned order and allow the appeal.