1988 (4) TMI 177 - AT - Central Excise

Summary

Issues:
1. Entitlement to deduction of Fertilizer Pool Equalisation Charges (FPEC) between specific dates.
2. Limitation period for demands raised against the respondents.

Analysis:

Entitlement to FPEC Deduction:
The main issue in this case was whether the respondents were entitled to the deduction of Fertilizer Pool Equalisation Charges (FPEC) between 18-7-1975 to 7-8-1975. The facts revolved around the exemption notification for fertilizers and the subsequent amendments. The respondents were initially availing a benefit of reduction in assessable value by Rs. 610/- per metric ton. However, due to a government decision to reduce retail prices, the equalisation charge was reduced to Rs. 335/-. The dispute arose because there was no specific notification by the Ministry of Finance during the relevant period allowing the deduction. The Assistant Collector initially denied the deduction, leading to a show cause notice. The Collector (Appeals) later allowed the deduction, considering the instructions of the Ministry of Agriculture and the exemption by the Ministry of Finance as part of a package scheme. The appellate tribunal ultimately held that the respondents were not entitled to the deduction under the notification between the specified dates due to the lack of a retrospective effect of the amending notification.

Limitation Period for Demands:
The second issue involved determining whether the demands raised against the respondents were within the prescribed limitation period. The respondents argued that the demand would be time-barred as it exceeded the period of limitation prescribed by Rule 10. The tribunal noted that there was no fraudulent act on the part of the respondents, and they had acted under a bona fide belief. The show cause notice was issued within the normal limitation period under Rule 10, making the demand time-barred. The tribunal concluded that Rule 10A could not be applied in this case, and only Rule 10 was available for enforcement. Consequently, the demand was dismissed on grounds of being hit by limitation, even though the revenue succeeded on merits.

In summary, the appellate tribunal dismissed the appeal based on both the entitlement to FPEC deduction and the limitation period for demands, ultimately ruling in favor of the respondents on the latter issue while acknowledging the revenue's success on the merits.