1991 (2) TMI 233 - AT - Central Excise

Summary

Issues:
Classification of product under Central Excise Tariff Act, 1985
Demand for Central Excise duty
Valuation of the product
Imposition of penalty under Central Excise Rules

Classification of Product:
The Additional Collector classified the product "Tread Rubber" under Item No. 16A(2) of the First Schedule to the Central Excises and Salt Act, 1944 till 28-2-1986 and under sub-heading 4006.10 of the Schedule to the Central Excise Tariff Act, 1985 from 28-2-1986. The appellants were held liable to pay duty at the tariff rate as they did not fulfill the conditions set out in specific Central Excise Notifications.

Demand for Central Excise Duty:
A demand for duty amounting to Rs. 69,846.85 was confirmed by the Additional Collector for the product cleared from 16-8-1985 to 30-12-1986. The extended period for demand of duty under Section 11A of the Central Excises and Salt Act was deemed applicable, leading to the imposition of duty. The valuation of the product as per the show cause notice was confirmed for assessment and demand of duty.

Valuation of the Product:
The valuation of the product was confirmed as per the show cause notice for the purpose of assessment and demand of duty. The appellants were required to pay duty at the tariff rate due to non-fulfillment of conditions specified in the Central Excise Notifications.

Imposition of Penalty:
A penalty of Rs. 5000/- was imposed on the appellants under various Central Excise Rules for contravention of several provisions. The penalty was imposed for non-compliance with the Central Excise Rules.

The judgment analyzed the aspect of limitation concerning the demand notice period from 16-8-1985 to 30-12-1986. The demand notice was deemed barred by limitation unless the Department could establish suppression of material facts, misstatement, collusion, fraud, or contravention of Central Excise Rules with intent to evade duty. The appellants' activities were not deemed clandestine, and their lapses in declaration and compliance were not considered deliberate suppression of facts. The judgment cited a Supreme Court case to support the view that deliberate action is required before imposing liability beyond the normal limitation period. Consequently, the demand for duty and the penalty were set aside, and the appeal was allowed.