1990 (8) TMI 248 - AT - Central Excise

Summary

Issues Involved:
1. Whether the demand is barred by limitation for the part of the period in Appeal No. 945/80-A.
2. Whether the appellants are entitled to the benefit of exemption Notification No. 120/75-CE, dated 30-4-1975.
3. Whether the appellants are entitled to the benefit of exemption Notification No. 119/75-CE, dated 30-4-1975.
4. Whether the Appellate Collector was justified in invoking/substituting Rule 10A for Rule 10 at the appeal stage in Appeal No. 586/81-A.
5. Whether the proceedings initiated either under Rule 10 or Rule 10A can survive after 6-8-1977 in the absence of a saving clause.

Detailed Analysis:

Issue 1: Limitation Period in Appeal No. 945/80-A
The appellants contended that the show cause notice dated 12-12-1977, covering June 1976 to November 1977, was time-barred beyond six months in the absence of any mis-statement or suppression of facts. They relied on a previous Tribunal decision (Order No. 19/89-A, dated 10-1-1989) which held that a longer limitation period could not be applied. The Tribunal agreed with this precedent, concluding that the show cause notice for the period from June 1976 to December 1976 was indeed barred by time. Consequently, the appellants succeeded on this issue.

Issue 2: Applicability of Notification No. 120/75-CE
The appellants argued that they complied with the formalities of Notification No. 120/75-CE, which should grant them exemption. They cited a Tribunal decision in Bridge and Roof Company (India) Ltd. v. Collector of Central Excise. However, the respondents referenced Bhartia Electric Steel Company Ltd. v. Collector of Central Excise, which countered the appellants' argument. The Tribunal found that the appellants cleared wagons mounted on wheel sets, not just wagon bodies, and thus the assessable value included the wheel sets. The Supreme Court's stance was that the value of the article includes all components supplied free by the customer. Therefore, the appellants were not entitled to the exemption under Notification No. 120/75.

Issue 3: Applicability of Notification No. 119/75-CE
The appellants claimed they performed job work for the Railways, which should fall under Notification No. 119/75-CE, making them liable only for duty on job charges. The respondents cited the Tribunal's decision in National Organic Chemicals Industries v. Collector of Central Excise, which limited the notification to incidental or ancillary manufacturing activities. The appellants argued that recent Supreme Court decisions (e.g., Siddheshwari Cotton Mills (P) Ltd. v. Union of India) supported their case. However, the Tribunal concluded that the appellants were not merely job workers but manufacturers of wagon bodies. Thus, they were not entitled to the exemption under Notification No. 119/75.

Issue 4: Invocation of Rule 10A in Appeal No. 586/81-A
The appellants contended that the Appellate Collector's substitution of Rule 10 with Rule 10A at the appeal stage was without jurisdiction, as Rule 10A was not in force at the relevant times. The Tribunal agreed, noting that the show cause notice was initially issued under Rule 10 and that the Appellate Collector exceeded his jurisdiction by invoking Rule 10A. Therefore, the department failed on this issue.

Issue 5: Survival of Proceedings Post-Deletion of Rules 10 and 10A
The appellants argued that proceedings under Rules 10 or 10A could not survive post their deletion on 6-8-1977 without a saving clause. The Tribunal referenced prior decisions (e.g., M/s. Atma Steels Pvt. Ltd. v. Collector of Central Excise) which held that proceedings initiated under valid rules at the time could continue despite their repeal. The Tribunal concurred with this view, concluding that the appellants failed on this issue.

Conclusion:
The appeals were disposed of in the above terms, with the appellants succeeding on the issue of the barred limitation period (Issue 1) and the department failing on the issue of invoking Rule 10A (Issue 4). The appellants did not succeed on the remaining issues (Issues 2, 3, and 5).