1987 (3) TMI 254 - AT - Central Excise

Issues Involved:
1. Entitlement to the benefit of Notification No. 74/79 and 75/79.
2. Entitlement to the benefit of Notification No. 89/79.
3. Justification of the demands.

Issue-Wise Detailed Analysis:

1. Entitlement to the Benefit of Notification No. 74/79 and 75/79:

The appellants contended that the motor vehicle parts were used as original equipment by a major manufacturer and claimed the benefit of Notification No. 74/79, dated 1-3-1979, which exempted parts and accessories of motor vehicles and tractors from the whole of the duty of excise. The Asstt. Collector did not consider this claim, leading to the appellants raising it again. The Tribunal found that the appellants had indeed raised this plea in their reply to the show cause notices, and thus, it was not a new claim. The Tribunal concluded that Notification No. 75/79, which also exempted parts and accessories of motor vehicles and tractors but required proof of use as original equipment, was applicable. The matter was remanded to the Asstt. Collector to determine the applicability of Notification No. 75/79 for the period 1-3-1979 to 30-4-1979.

2. Entitlement to the Benefit of Notification No. 89/79:

The appellants claimed the benefit of Notification No. 89/79 for the periods 10-5-1979 to 6-8-1979 and 17-8-1979 to 12-10-1979. This notification exempted goods falling under Item 68 from excise duty, provided the total value of the said goods cleared in the preceding financial year did not exceed Rs. 30 lakhs. The lower authorities denied this exemption, interpreting that the total value of clearances under TI 34A in the preceding financial year exceeded Rs. 30 lakhs. The Tribunal found this interpretation fallacious, stating that the restriction should apply only to "said goods" under Item 68. Since the appellants had not cleared Item 68 goods exceeding Rs. 30 lakhs in the preceding financial year, the benefit of Notification No. 89/79 could not be denied. The Tribunal also noted that the appellants had applied for a licence, and the penalty imposed for not having a licence was set aside by the Appellate Collector.

3. Justification of the Demands:

The controversy arose from three show cause notices covering different periods. The first show cause notice, dated 30-8-1978, related to the period 1-3-1979 to 30-4-1979, alleging that the appellants cleared goods exceeding the value admissible for exemption. The second show cause notice, issued on 23-2-1980, covered the period 10-5-1979 to 6-8-1979, alleging removal of goods without payment of duty. The third show cause notice, also issued on 23-2-1980, covered the period 17-8-1979 to 12-10-1979, alleging a short levy. The Tribunal found that the second show cause notice was beyond six months, and in the absence of any plea of suppression or clandestine removal, the demand could not be sustained. The Tribunal also noted that the Asstt. Collector's order included periods not covered by the show cause notices, and the duty was not quantified. Consequently, the demand for the remaining period was set aside, and the penalty of Rs. 1,500/- was directed to be entirely set aside.

Conclusion:

The Tribunal remanded the matter to the Asstt. Collector to determine the applicability of Notification No. 75/79 for the period 1-3-1979 to 30-4-1979. The demand for the remaining period was set aside, and the penalty of Rs. 1,500/- was entirely set aside. The appeal was disposed of accordingly.

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