1987 (3) TMI 355 - AT - Central Excise

Summary

Issues: Time-barred demand for duty, interpretation of Central Excise Act, applicability of Notification No. 54/64, invocation of extended time limit under Rule 9(2) and Section 11A.

Analysis:

The case involved an appeal against the order of the Additional Collector of Central Excise and Customs, Pune, regarding the non-payment of duty on scrap generated and used in the factory during the manufacturing process of castings. The appellants argued that the demand for duty was time-barred, invoking Rule 9(2) read with Section 11A of the Central Excise Act, 1944. They relied on a previous judgment to support their claim that the longer time limit for raising demand should not be invoked when the activity was known to the department. Additionally, the appellants contended that the scrap generated during the use of duty paid steel melting scrap for castings did not attract duty as no new article emerged, citing relevant provisions of the Central Excise Act and a tribunal order. The appellants claimed that no duty was leviable on the scrap generated in the casting process as per Notification No. 54/64, although there was uncertainty regarding the origin of the goods and the claimed benefit of the notification. The department, represented by the learned SDR, acknowledged the appellants' time-bar defense but argued that the issue could still be raised at the Tribunal level. The Additional Collector's order highlighted that the appellants did not inform the department about the goods they were producing, leading to a lack of clarity regarding the classification and declaration of by-products and intermediary products. However, the Tribunal found that the demand was time-barred as there was no evidence of fraud or suppression of facts by the appellants to evade duty. The Tribunal concluded that the extended time limit could not be invoked in this case, setting aside the lower authority's order and allowing the appeal solely on the limitation point without delving into other issues raised.

In summary, the judgment primarily addressed the time-barred nature of the duty demand, considering the appellants' argument, the department's response, and the Additional Collector's observations. The Tribunal's decision focused on the absence of fraud or suppression of facts, determining that the extended time limit under Rule 9(2) and Section 11A could not be applied due to the lack of evidence supporting such invocation. The case was decided in favor of the appellants based on the limitation point, without further analysis of other contested issues related to duty liability and the applicability of specific notifications.