1987 (7) TMI 220 - AT - Central Excise

Issues Involved:
1. Frequent changes in the classification of aluminium foil scrap.
2. Validity of the demand notices issued for differential duty.
3. Time-barred claims under Rule 10 of the Central Excise Rules, 1944.
4. Acquiescence and payment of duty under protest.
5. Retrospective application of trade notices.

Detailed Analysis:

1. Frequent Changes in Classification:
The judgment noted the numerous changes in the classification of aluminium foil scrap between 1967 and 1978. Initially, the Assistant Collector classified the scrap under Tariff Heading 27(a)(i) as crude aluminium. However, in November 1975, the classification was changed to Heading 27(c) as foil. This was reverted back to crude aluminium in February 1978 through a trade notice. The tribunal emphasized that these frequent changes were arbitrary and caused significant disruption to the manufacturers.

2. Validity of Demand Notices:
The tribunal scrutinized the demand notices issued by the Central Excise authorities. The first notice dated 1-4-1978 was deemed irrelevant as it did not specify the amount demanded or the period concerned. The subsequent notice dated 18-7-1978 demanded Rs. 1,165,497.05, which was later scaled down to Rs. 242,005.98. However, the tribunal found that these demands were not valid as they were based on arbitrary changes in classification rather than any genuine short levy.

3. Time-Barred Claims:
The tribunal examined the applicability of Rule 10 of the Central Excise Rules, 1944, which allows for recovery of duty not levied or short levied within six months. It was determined that the demand for the period from 1-7-1976 to 6-2-1978 was time-barred. The Assistant Collector's order to issue a fresh demand for the six months preceding 1-4-1978 was also found to be time-barred and therefore null and void.

4. Acquiescence and Payment Under Protest:
The department argued that the manufacturers acquiesced to the classification under Heading 27(a) since they did not pay the duty under protest. However, the tribunal dismissed this argument, stating that the manufacturers' compliance with the trade notice did not imply acquiescence. The tribunal noted that manufacturers could not be expected to protest every trade notice and that the lack of protest did not validate the retrospective demand for differential duty.

5. Retrospective Application of Trade Notices:
The tribunal held that the retrospective application of the trade notice issued in February 1978 was not justified. The Assistant Collector's order to apply the trade notice retrospectively was found to be erroneous. The tribunal emphasized that the reassessment could only take place from the date of the trade notice and not for the past periods.

Conclusion:
The tribunal set aside the demand for differential duty and prohibited the recovery of any money under it. It was held that the assessment at the crude rate from 7-2-1978, following the issuance of the public notice, was in order and should not be altered. The tribunal's decision highlighted the need for consistency in classification and the importance of adhering to legal provisions regarding time-barred claims.

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