1984 (2) TMI 233 - AT - Central Excise

Summary

Issues:
1. Time limit for demand of duty under Rule 10 of the Central Excise Rules.
2. Applicability of exemption under Notification No. 71/78 for goods cleared on behalf of a loan licensee.
3. Time bar for issuance of show cause notice.
4. Interpretation of the clarification regarding the eligibility for exemption under Notification Nos. 71/78 and 80/80.

Analysis:
1. The appeal was filed against the order passed by the Collector of Central Excise, Jaipur, regarding the duty payable by the appellants for exceeding clearances during 1978-79. The Central Board of Excise & Customs remanded the matter for further inquiry to determine the applicability of the exemption under Notification No. 71/78. The Collector's decision was challenged on the grounds of time limit for the demand of duty under Rule 10 of the Central Excise Rules. The appellants argued that the demand issued on 10-3-1980 for goods removed during 1-4-1978 to 12-9-1978 was time-barred. The Tribunal found the show cause notice to be beyond the prescribed time limit under Section 11A of the Central Excises & Salt Act, 1944, and ruled in favor of the appellants, holding the demand to be time-barred.

2. The issue of exemption under Notification No. 71/78 for goods cleared on behalf of a loan licensee was raised. The appellants contended that they were entitled to the exemption for goods worth Rs. 1.29 lakhs cleared on behalf of the loan licensee. The Department argued against this exemption based on a clarification issued by the Ministry of Finance, Department of Revenue. The Tribunal did not delve into this issue extensively due to the disposal of the appeal on the grounds of time bar, hence refraining from providing a conclusive finding on the exemption claim.

3. The eligibility for exemption under Notification Nos. 71/78 and 80/80 was debated, focusing on the value of goods cleared on behalf of a loan licensee. The Department argued that the appellants were not entitled to the exemption based on a modified communication. The Tribunal, however, did not make a definitive ruling on this issue as the appeal was allowed primarily due to the time-barred nature of the show cause notice.

4. The Tribunal carefully considered the contentions raised by both parties. It was observed that the show cause notice was issued beyond the prescribed time limit, rendering it time-barred under Section 11A of the Act. The Department's allegation of suppression of facts was not substantiated, and the Tribunal found that the demand was indeed time-barred. The appellants' claim for exemption under Notification No. 71/78 was not conclusively addressed due to the disposal of the appeal on the grounds of time bar.

In conclusion, the Tribunal allowed the appeal in favor of the appellants primarily due to the time-barred nature of the show cause notice, without providing a definitive ruling on the exemption claim under Notification No. 71/78.