1990 (5) TMI 144 - AT - Central Excise

Summary

Issues Involved:
1. Whether the Central Excise authorities are bound by the classification made by the Customs authorities in respect of the countervailing duty.
2. Whether the show cause notice is barred by limitation.

Issue-wise Detailed Analysis:

Issue 1: Whether the Central Excise authorities are bound by the classification made by the Customs authorities in respect of the countervailing duty.

The appellants argued that the jurisdictional Customs authorities at Delhi assessed the Bills of Entry for countervailing duty under Tariff Item No. 33D, and this assessment had attained finality. They contended that the Central Excise authorities at Rampur had no jurisdiction to reclassify the goods under Tariff Item No. 68, citing precedents such as Jay Industries, Hyderabad v. Collector of Central Excise, Hyderabad [1984 (16) E.L.T. 462] and Collector of Central Excise, Patna v. Telco Ltd. [1988 (34) E.L.T. 702]. The Tribunal agreed with this contention, stating that the issue is concluded by these orders and that the Central Excise authorities are bound by the classification made by the Customs authorities in relation to the countervailing duty. It was emphasized that the classification and assessment adopted by the Customs authorities had become final, and the Central Excise authorities had no jurisdiction to re-assess the goods. Therefore, the Tribunal accepted the appellants' contention that the Central Excise authorities are bound by the classification made by the Customs authorities.

Issue 2: Whether the show cause notice is barred by limitation.

The show cause notice was issued on 21-7-1988, while the credits were effected in the year 1985. Under sub-rule 5 of Rule 56A, the show cause notice must be served within six months from the date of the credit in cases of error, omission, or mis-construction by the officer. However, in cases involving wilful mis-statement, collusion, or suppression of facts by the manufacturer or assessee, the notice should be served within five years from the date of the credit. The Tribunal examined whether there was any material on record to establish suppression of facts. The main contention by the respondent was that the letter dated 19-12-1984 was misleading, creating an impression that the appellants were importing photocopying machines in CKD/SKD condition. However, the Tribunal found that the Central Excise authorities were aware that the appellants were importing components of photocopying machines, as evidenced by the letter and the reply from the Assistant Collector. The Tribunal also noted that the invoices, Bills of Entry, and D-3 Forms described the goods as components for Xerographic equipment, and the Customs authorities independently applied their mind while determining the classification. Consequently, the Tribunal concluded that there was no material to establish suppression or mis-declaration, and the show cause notice was barred by limitation. Therefore, the appeal was allowed, and the order of the Collector was set aside.

Conclusion:

The Tribunal concluded that the Central Excise authorities are bound by the classification made by the Customs authorities in respect of countervailing duty and that the show cause notice was barred by limitation due to the lack of material evidence for suppression or mis-declaration. The appeal was accordingly allowed, and the order of the Collector was set aside.