1988 (6) TMI 161 - AT - Central Excise

Issues:
1. Validity of show cause notice and imposition of penalty.
2. Duty liability on manufactured transformers.
3. Applicability of Notification No. 57/75 for duty exemption.
4. Invocation of extended period of limitation for duty demand.
5. Availability of benefit under Notification 118/75.
6. Imposition of penalty on a statutory body.
7. Claim for set off of duty under Notification No. 201/79.

Analysis:

1. The validity of the show cause notice and imposition of penalty was challenged. The appellants argued that the notice was defective as it was issued by the Assistant Collector to show cause to the Collector without proper justification. However, the Tribunal held that the notice was valid as there was no requirement at the time for the Collector to issue such notices personally. The challenge on this ground was rejected.

2. The issue of duty liability on the manufactured transformers was raised. The appellants contended that the transformers were merely assembled from component parts and did not amount to manufacturing attracting excise duty. The Tribunal disagreed, stating that the transformer, as a distinct product with different functions and uses, attracted excise duty separately from its component parts. The argument of double taxation was dismissed.

3. The applicability of Notification No. 57/75 for duty exemption was disputed. The appellants claimed exemption under this notification as a state government entity. However, the Tribunal ruled that the Haryana State Electricity Board could not be considered a "State" for the purposes of this dispute, as it did not fall under the relevant constitutional provisions. The claim for exemption was rejected.

4. The invocation of the extended period of limitation for duty demand was contested. The appellants argued that no allegations of misstatement or fraud were made in the show cause notice, which was necessary for invoking the extended period. The Tribunal agreed, holding that the demand could not be enforced beyond the normal six-month period without such allegations.

5. The availability of benefit under Notification 118/75 was questioned. The Tribunal found that the transformers were not intended for use in the same factory or any other factory of the manufacturer, making them ineligible for the notification's benefits. The denial of benefit under this notification was upheld.

6. The imposition of penalty on a statutory body was debated. The appellants argued against the penalty, claiming it could only be imposed on individuals, not statutory bodies. The Tribunal, considering the lack of mala fide intent for duty evasion by the appellants, ruled that the penalty was not warranted in this case.

7. A claim for set off of duty under Notification No. 201/79 was made. The appellants sought to claim set off for duty paid components used in manufacturing the transformers. The Tribunal found that the procedural requirements of the notification were not met due to the appellants' genuine belief that no duty was payable. It directed the Collector to grant the benefit under the notification based on acceptable evidence.

In conclusion, the Tribunal upheld the excisability of the goods but set aside the penalty. The demand for duty was restricted to the normal six-month period preceding the show cause notice, and the benefit under Notification No. 201/79 was directed to be granted to the extent permissible. The matter was remitted to the Collector for a fresh order in line with these directions.

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