1987 (12) TMI 184 - AT - Central Excise

Summary

Issues:
1. Classification of laminated jute bags under item 68 CET or item 22A CET.
2. Barred by limitation under Section 11A - whether the demand for duty is time-barred.

Classification Issue Analysis:
The case involved a dispute regarding the classification of laminated jute bags manufactured by the appellants. The Department contended that the bags were classifiable under item 68 CET and became duty exempt only from a specific date. On the other hand, the appellants argued that the bags fell under item 22A CET and were exempt from duty under a different notification. The appellants cited various tribunal decisions and a recent judgment of the Andhra Pradesh High Court supporting their classification stance. However, the Department insisted on following earlier decisions upholding classification under item 68 CET. The Tribunal noted the conflicting views but deemed it unnecessary to resolve the classification issue due to other submissions raised by the appellants.

Limitation Issue Analysis:
The primary contention raised by the appellants was that the demand for duty was barred by limitation under Section 11A. The show cause notice was issued after a significant period following the relevant period for duty demand. The notice did not allege fraud, collusion, willful misstatement, or suppression of facts by the appellants. The appellants highlighted correspondence with the Department indicating transparency in their manufacturing activities and approvals obtained for the same. The Tribunal found that the Department had prior knowledge of the manufacturing operations and no evidence of suppression was established. Therefore, the Tribunal held that the demand for duty was time-barred and set aside the orders of the lower authorities.

In conclusion, the Appellate Tribunal allowed the appeal, ruling in favor of the appellants on the grounds of the demand being barred by limitation under Section 11A. The classification issue was not delved into due to the time limitation defense successfully raised by the appellants. The orders of the lower authorities were set aside, providing consequential relief to the appellants.