1989 (3) TMI 238 - AT - Central Excise

Issues Involved:
1. Reopening of exemption under Notification 176/77-C.E.
2. Competence of the Collector to demand duty under Rule 10.
3. Plea of limitation for duty demand.
4. Inclusion of rejected goods and trade discounts in the computation of clearances.
5. Justification for seizure and confiscation of goods.
6. Imposition of penalty.

Issue-wise Detailed Analysis:

1. Reopening of exemption under Notification 176/77-C.E.:
The appellants argued that the exemption granted by the Assistant Collector could only be reopened through regular review proceedings under Section 35-A of the Act, not by a separate show cause notice. The respondent contended that the Collector had new material based on the appellant's R.T. 12 returns and sale invoices, justifying the reopening. The Tribunal agreed with the respondent, citing the Calcutta High Court's ruling in ITC Ltd., which supports the independent invocation of Section 11-A for reopening cases based on new evidence.

2. Competence of the Collector to demand duty under Rule 10:
The appellants claimed that only the Assistant Collector could demand duty under Rule 10. The respondent referred to the Tribunal's judgment in D.C.W. Ltd., asserting that the Collector was competent. The Tribunal upheld the respondent's position, agreeing that the Collector's competence to demand duty was established by precedent.

3. Plea of limitation for duty demand:
The appellants argued that the demand was time-barred as the R.T. 12 returns were already available to the department, and there was no concealment or suppression of facts. The respondent maintained that the declaration to the Assistant Collector was incorrect, justifying the invocation of the five-year limitation period. The Tribunal sided with the appellants, noting that the material was not concealed and the demand for duty was time-barred.

4. Inclusion of rejected goods and trade discounts in the computation of clearances:
The appellants contended that the value of goods rejected and resold, and trade discounts, should be excluded from the computation of clearances. The respondent reiterated the adjudicating authority's findings that these should be included. The Tribunal found the adjudicating authority's stance incorrect, stating that the value for exemption purposes should align with Section 4 of the Act, which includes trade discounts. The Tribunal remanded the matter to reassess clearances excluding rejected goods and considering trade discounts.

5. Justification for seizure and confiscation of goods:
The appellants argued that the seizure was unjustified as they were operating under an exemption. The respondent countered that the appellants failed to prove the goods were manufactured during the valid L-4 licence period. The Tribunal found the department had the burden of proving the manufacturing date and ruled the seizure and confiscation unjustified, setting aside the confiscation and fine.

6. Imposition of penalty:
The appellants claimed the penalty was unwarranted due to a bona fide misunderstanding. The respondent argued that the mis-declaration justified the penalty. The Tribunal deferred the penalty decision, contingent on the reassessment of the aggregate clearances. If mis-declaration is confirmed, the penalty of Rs. 3,000 would stand.

Conclusion:
The appeal was disposed of with the Tribunal remanding the matter for reassessment of clearances and setting aside the confiscation and fine, while deferring the penalty decision pending reassessment.

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