1988 (2) TMI 378 - AT - Central Excise

Summary

Issues:
1. Time-barred demands for penalty and duty recovery
2. Interpretation of Central Excise Rules regarding export procedures
3. Allegations of deliberate evasion of duty and contravention of law
4. Imposition of penalty by the Collector
5. Discrepancy in treatment of similar cases by the Collector

Analysis:

Issue 1: Time-barred demands for penalty and duty recovery
The case involves demands for penalties and duty recovery issued by the Assistant Collector of Central Excise, Jamshedpur, against M/s. Tata Iron & Steel Co. Ltd. between 1976 and 1980. The key contention raised by the Counsel for M/s. Tata Iron & Steel Co. was that the demands issued in 1982 were time-barred as they related to periods beyond the normal six-month limit. The Collector invoked a longer period of five years, alleging deliberate evasion of duty. However, the Counsel argued that there was no fraud or suppression involved, as the exports were made with full knowledge of the authorities and in compliance with Rule 13 of the Central Excise Rules.

Issue 2: Interpretation of Central Excise Rules regarding export procedures
The dispute also centered around the interpretation of Rule 13 of the Central Excise Rules, which allows for the export of goods under bond without paying duty. The Assistant Collector contended that Rule 13 was a procedural provision without provisions for duty exemption or rebate, unlike Rule 12. The Collector held that M/s. Tata Iron & Steel Co. had received benefits exceeding those available under Rule 12 by exporting under bond. The Counsel argued that the exporters followed the prescribed procedure under Rule 13 and did not engage in deliberate evasion.

Issue 3: Allegations of deliberate evasion of duty and contravention of law
The Senior Departmental Representative (SDR) argued that M/s. Tata Iron & Steel Co. deliberately evaded duty by exporting goods under bond instead of claiming rebate under Rule 12, which provides only partial exemption. The SDR contended that the exporters should have availed only partial relief under Rule 12 instead of total exemption under Rule 13. This led to allegations of willful suppression and fraudulent shipment to evade legitimate dues, which the Counsel refuted, emphasizing compliance with the law and procedural requirements.

Issue 4: Imposition of penalty by the Collector
Despite allegations of deliberate evasion, the Collector refrained from imposing any penalty on M/s. Tata Iron & Steel Co., raising questions about the legitimacy of the demands. The absence of a penalty, despite the serious allegations, indicated a lack of conviction in the Collector's stance on deliberate evasion. This leniency suggested doubts about the Collector's belief in the intentional evasion of duty by the assessees.

Issue 5: Discrepancy in treatment of similar cases by the Collector
The Counsel highlighted a similar case involving M/s. SAIL, where the Collector acknowledged that exports were made with departmental approval and discharged bonds to the satisfaction of authorities. The Collector in that case found no proof of intentional evasion and barred the demand due to the time limit. This raised concerns about the inconsistency in the Collector's approach towards similar cases, indicating a change in perception and understanding over time.

In conclusion, the judgment addressed the time-barred demands, interpretation of Central Excise Rules, allegations of deliberate evasion, penalty imposition, and discrepancies in the Collector's treatment of similar cases. The decision favored M/s. Tata Iron & Steel Co., setting aside the demands based on the arguments presented and inconsistencies in the Collector's approach.