1983 (7) TMI 193 - AT - Central Excise

Summary

Issues Involved:
1. Limitation under Section 11-A of the Central Excises and Salt Act, 1944.
2. Alleged willful mis-statement and suppression of facts by the appellant.
3. Eligibility for exemption under Notification No. 44/80.

Summary:

1. Limitation under Section 11-A of the Act:
The appellant, M/s. Chemicals & Fibres of India Limited (CAFI), contended that the demand-cum-show cause notice dated 3rd March 1982 was barred by limitation as stipulated u/s 11-A of the Act. The Tribunal noted that the limitation period is six months unless there is fraud, collusion, willful mis-statement, or suppression of facts, in which case it extends to five years. The Tribunal emphasized that if the appellant disclosed all particulars and was not guilty of any willful mis-statement or suppression, the normal six-month period would apply. The Tribunal found that the appellant had disclosed the manufacturing process in the covering letter to the classification list, which should be read as part of the classification list. Therefore, the show cause-cum-demand notice was barred by limitation.

2. Alleged Willful Mis-statement and Suppression of Facts:
The Revenue alleged that CAFI had willfully mis-stated and suppressed facts to evade duty. The Tribunal examined the Assistant Collector's and Collector's orders, which stated that the appellant had disclosed the process of crushing and melt spinning but claimed it did not involve recycling. The Tribunal found that the term 'recycling' was not defined in the Act or Rules, and different inferences could be drawn. The Tribunal concluded that the appellant's actions did not constitute willful mis-statement or suppression of facts, and the extended five-year limitation period was not applicable.

3. Eligibility for Exemption under Notification No. 44/80:
The appellant claimed exemption under Notification No. 44/80 for polyester staple fibre manufactured from waste. The Tribunal noted that since the show cause-cum-demand notice was barred by limitation, it was unnecessary to adjudicate on the merits of the classification and exemption notification.

Conclusion:
The Tribunal held that the show cause-cum-demand notice dated 3rd March 1982 was barred by limitation and struck it down as bad in law. Consequently, the excise duty demand of Rs. 9,25,177.50 and the penalty of Rs. 5000/- imposed on CAFI were canceled. The appeal was allowed.