1988 (1) TMI 176 - AT - Central Excise

Summary

Issues Involved:
1. Denial of principles of natural justice in holding the assessment as provisional without stating so in the show cause notice.
2. Whether the assessment could be considered at all as provisional.
3. Whether the inputs exempted under Notification No. 101/66 and used in the manufacture of the said goods can be taken to have been cleared on payment of appropriate duty.

Summary:

Issue 1: Denial of principles of natural justice in holding the assessment as provisional without stating so in the show cause notice.

The appellants argued that the demand of duty was made without any mention of provisional approval of classification lists in the show cause notice. The original adjudicating authority held that there had been no suppression of facts by the appellants and the duty was demanded on the ground that the approval accorded to the classification lists was provisional. The appellants contended that the provisional duty procedure set out in Rule 9(2) was not followed, and thus, the assessments could not be considered provisional. The judgment noted that the approval of classification lists is a quasi-judicial function and should be finalized promptly, but the authorities failed to do so.

Issue 2: Whether the assessment could be considered at all as provisional.

The judgment observed that the classification lists were approved at different times with different endorsements. The appellants had been allowed to clear goods year after year, and the RT 12 returns were accepted without finalizing the assessments. It was noted that the provisional assessment procedure under Rule 9(2) was not followed. The judgment highlighted that the appellants themselves contributed to the confusion by giving an undertaking to pay duty retrospectively if found ineligible for the exemption. The court refrained from giving a definitive finding on this issue due to the subsequent findings on the third issue.

Issue 3: Whether the inputs exempted under Notification No. 101/66 and used in the manufacture of the said goods can be taken to have been cleared on payment of appropriate duty.

The appellants argued that even though some inputs were cleared at nil duty, they should be considered as duty-paid for the purpose of the notification. The judgment referred to similar cases, including the Tata Yodogawa Limited case, where the court held that inputs cleared at nil duty could be considered as having discharged the appropriate duty. The judgment concluded that the appellants were entitled to the benefit of Notification No. 101/66, as the use of exempted inputs did not disqualify them from the exemption. The appeal was allowed, and the order of the lower authority was set aside.