1990 (3) TMI 173 - AT - Central Excise

Summary

Issues Involved:
(a) Eligibility of nylon sandwiched leather belting or belts for the benefit of Notification 115/75 dated 30-4-1975.
(b) Whether the demand for duty is partly time-barred.
(c) Whether trade discount/commission should be deducted from the assessable value of the goods.

Detailed Analysis:

Issue (a): Eligibility for Notification 115/75

The appellants manufacture transmission and conveyor beltings using leather combined with nylon strip and/or other textile material, believing they were entitled to full exemption from duty under Notification 115/75-CE dated 30-4-1975. The goods fall under T.I. 68 and the appellants believed their factory was covered under the "Tanning Industry" as per the notification.

The Collector rejected this contention, stating:
1. Tanning is ancillary to the main process of manufacturing belting, indicating the final products are not of the tanning industry.
2. The unit's name and style suggest they are manufacturers of nylon laminated belts, not tanners.
3. The sale of leather goods, which can be termed as products of the tanning industry, is negligible.

However, technical opinions from several experts, including the Director (Leather) Office of the Development Commissioner Small Scale Industries, Director of Industries, U.P., and others, uniformly regarded leather sandwiched belts as products of the tanning industry. The Tribunal emphasized that certificates reflecting technical opinions of experts deserve utmost credence unless contradicted by other technical evidence.

The Tribunal concluded that leather sandwiched beltings, being T.I. 68 goods manufactured in a factory covered by the "tanning industry," are eligible for exemption under Notification 115/75 dated 30-4-1975.

Issue (b): Time-Barred Demand for Duty

The show cause notice was issued on 29-8-1980, demanding duty for the period from 1-4-1979 to 26-3-1980. The appellants argued that the notice was time-barred, as they believed they were entitled to exemption under Notification 115/75 and had furnished correct particulars about their production and clearance.

The Tribunal found that the declaration given on 27-3-1979 was not under Notification 111/78 dated 1-3-1978, as held by the Collector. The Collector's assumption that the appellants were required to apply for a license upon crossing 80% of their estimated value was incorrect. The Tribunal held that the extended period of limitation under Rule 9(2) could not be invoked as there was no suppression of facts or clandestine removal of goods. The demand for duty prior to 28-2-1980 was thus barred by limitation, leaving only the demand from 1-3-1980 to 26-3-1980 within time.

Issue (c): Trade Discount/Commission Deduction

The Collector had held that the appellants were not entitled to claim deduction on trade discount/commission as it was of the nature of deferred payment and not allowed at the time of removal of goods from the factory. However, as the Tribunal decided the eligibility for Notification 115/75 in favor of the appellants, it found it unnecessary to discuss the issue of inclusion of trade discount/commission in the assessable value of the goods.

Conclusion:
The Tribunal set aside the impugned order and allowed the appeal with consequential relief, concluding that the appellants were eligible for the benefit of exemption under Notification 115/75 and that the demand for duty prior to 28-2-1980 was barred by limitation.