1986 (11) TMI 182 - AT - Central Excise

Summary

Issues:
1. Determination of the value of clearances for the purpose of a specific notification.
2. Inclusion of Ayurvedic Medicines under Tariff Item 68 for exemption eligibility.
3. Classification of Dantmanjan Lal as an Ayurvedic Medicine.
4. Application of the limitation period for demand in the case.

Analysis:
1. The primary issue in this appeal before the Appellate Tribunal CEGAT, New Delhi was the determination of the value of the respondent's clearances for the purpose of Notification No. 71/78 dated 1-3-1978. The key question was whether Ayurvedic Medicines, falling under Tariff Item 68, were to be considered in calculating the aggregate value of clearances under the said notification during the relevant period.

2. The dispute revolved around the classification of Ayurvedic Medicines under Tariff Item 68 before the amendment in 1980. The notification in question did not specify goods falling under Tariff Item 68 initially. However, subsequent amendments added explanations regarding the computation of aggregate clearances, leading to a debate on the inclusion of Ayurvedic Medicines for the exemption eligibility.

3. Another significant aspect of the case was the contention regarding the classification of Dantmanjan Lal as an Ayurvedic Medicine. The appellant argued that including Dantmanjan Lal, even if other Ayurvedic Medicines were considered non-excisable, would disqualify the respondent from the notification's benefit. This argument was supported by a recent Tribunal decision and a Bombay High Court ruling, emphasizing the importance of correct classification for exemption eligibility.

4. Additionally, the parties debated the application of the limitation period for demand under Rule 10 of Central Excise Rules, 1944. The appellant alleged suppression of facts by the respondent, while the respondent sought the benefit of the 6-month limitation period. The Tribunal examined the facts and concluded that a shorter limitation period was appropriate in this case, limiting the demand to six months preceding the show cause notice date.

5. Ultimately, the Tribunal allowed the appeal, ruling that the respondent was not eligible for the exemption under Notification No. 71/78 dated 1-3-1978 due to the inclusion of Dantmanjan Lal in the value of clearances. The demand for duty was restricted to a period of six months preceding the show cause notice date, concluding the matter before the Tribunal.