1988 (11) TMI 236 - AT - Central Excise

Summary

Issues:
1. Interpretation of Notification No.198/76 regarding exemption for manufacturers.
2. Allegation of wilful suppression of material facts by the respondents.
3. Application of Rule 10 for issuing a show cause notice.
4. Consideration of limitation period for the demand raised by the department.

Analysis:
1. The appeal involved the interpretation of Notification No.198/76, which granted exemption to manufacturers. The respondents, manufacturers of fertilizers, operated two units and availed exemption individually for each unit. The Coordinating Assistant Collector approved base clearance for each unit separately, allowing them to claim the concessional rate of duty. The department argued that the benefit should have been availed collectively for both units, alleging wilful suppression of facts by the respondents. However, the Tribunal noted that the department itself initially misunderstood the scope of the notification, and since the base clearance was fixed for each unit, it was reasonable for the respondents to avail the benefit individually. The Tribunal found no deliberate misrepresentation by the respondents.

2. The department invoked Rule 10 in the show cause notice, alleging that the respondents had taken excise relief based on individual base clearances instead of combined clearance. The Assistant Collector confirmed a demand of Rs. 32,32,826.35, citing non-compliance with the notification requirements. However, the Collector (Appeals) held that the demand was time-barred and there was no need to apply Rule 10. The Tribunal agreed with the Collector (Appeals), emphasizing that the show cause notice was issued beyond the prescribed limitation period, rendering the demand invalid.

3. The issue of limitation was crucial in this case. The Tribunal found that the department failed to establish any deliberate advantage taken by the respondents in availing the concessional rate of duty. Despite the department's contention that the respondents could have claimed the benefit earlier if properly informed, the Tribunal held that the Collector (Appeals) correctly determined the demand to be barred by time. As a result, the appeal was rejected, affirming the decision of the Collector (Appeals) on the limitation issue and dismissing the department's claim of illegality.