1990 (9) TMI 172 - AT - Central Excise

Summary

Issues:
1. Time limit for recovery of duty under Rule 49A.
2. Applicability of Explanation to Section 4 of the Central Excises and Salt Act, 1944.
3. Interpretation of duty under the Central Excises and Salt Act, 1944.
4. Levy of interest on additional duty of excise under the Additional Duties Act, 1978.

Analysis:
1. The case involved a dispute regarding the time limit for the recovery of duty under Rule 49A. The original authority applied the proviso to Section 11A of the Central Excises and Salt Act, 1944, allowing a demand for a 5-year period due to a contravention of Rule 49A. However, on appeal, the Collector of Central Excise (Appeals) held that the demand was time-barred under the normal 6-month limit of Section 11A, as there was no allegation of suppression or misstatement of facts in the show cause notice. The Tribunal upheld the Collector's decision, citing precedents and emphasizing the absence of grounds for extending the time limit beyond 6 months.

2. The appellant-Collector argued that the duty under Rule 49A should include all duties of excise, not just those under the Central Excises and Salt Act, based on the Explanation to Section 4 of the Act. However, the respondents contended that this explanation applies only to duties leviable on an ad valorem basis, not weight-based duties like yarn. The Tribunal agreed with the respondents, stating that the explanation to Section 4 is only relevant when Section 4 is being applied, which was not the case here.

3. Another issue raised was the interpretation of duty under the Central Excises and Salt Act, 1944, concerning the levy of interest on the basic duty of excise. The respondents argued that Rule 49A should only apply to duties under the Central Excises and Salt Act, excluding duties under the Additional Duties Act, 1978. However, the Tribunal rejected this argument, citing Section 3(3) of the 1978 Act, which makes the provisions of the Central Excises and Salt Act applicable to the levy of duties under the 1978 Act. Therefore, Rule 49A would also apply to the additional duty of excise under the 1978 Act.

4. Lastly, the appellant-Collector contended that the time limit for recovery of short payment of interest under Rule 49A should be 5 years due to contravention with an intent to evade payment. However, the Tribunal relied on a previous decision to uphold a general limitation of 3 years for such cases. Since the show cause notice fell within the 3-year limit, the Tribunal deemed it timely for the recovery of short-payment of interest on yarn duty for the specified period. Ultimately, the Tribunal allowed the appeal of the Revenue and set aside the impugned order.