1992 (3) TMI 168 - AT - Central Excise

Summary

Issues Involved:
1. Whether the appellants are independent units or only Michael Match Works is the manufacturer.
2. Entitlement to the benefit of Notification No. 22/82 dated 23-2-1982.
3. Whether the demand is barred by time.
4. Consideration of the appellants' fresh claim for Notification No. 42/81.

Summary:

1. Whether the appellants are independent units or only Michael Match Works is the manufacturer:
The Tribunal examined whether the eight match factories were independent units or if only Michael Match Works was the manufacturer, using the other units as a facade to avail concessional duty rates. The Department alleged that the seven other units did not have essential equipment or raw materials for production and were merely used to distribute the production from Michael Match Works to avail benefits under Notification No. 22/82. The appellants contended that each unit had separate L4 licenses, maintained statutory records, and were under physical control with regular inspections by Central Excise authorities. The Tribunal found that the Department's case was based on circumstantial evidence and lacked tangible proof, such as statements from workers or suppliers. The Tribunal referred to similar cases where such allegations were not upheld due to lack of concrete evidence.

2. Entitlement to the benefit of Notification No. 22/82 dated 23-2-1982:
The Tribunal analyzed the applicability of Notification No. 22/82, which provided a concessional duty rate for cottage sector match factories. The Department argued that the exemption was not applicable as the production was centralized in Michael Match Works. The Tribunal noted that each unit had separate licenses and maintained statutory records, and the units were under physical control with regular inspections. The Tribunal found that the Department's allegations were not substantiated with sufficient evidence and referred to previous rulings where similar allegations were dismissed. Therefore, the Tribunal concluded that the appellants were entitled to the benefit of the notification.

3. Whether the demand is barred by time:
The appellants argued that the demand was time-barred as the show cause notice was issued on 11-11-1986 for the period 1-4-1985 to 31-3-1986, and the detection of the alleged offense was on 12-9-1985. The Tribunal noted that the demands for the period after the date of the first mahazar (12-9-1985) would not be sustainable under the proviso to Section 11A of the Act. The Tribunal also noted that the units were under physical control with regular checks, and the type of activity was within the knowledge of the Department, making the charge of suppression unsustainable. Thus, the demand was found to be time-barred.

4. Consideration of the appellants' fresh claim for Notification No. 42/81:
The appellants made a miscellaneous application to raise the plea of applicability of Notification No. 42/81, which provided benefits to units not using power in the manufacture of matches. The Tribunal found that as the appellants had succeeded on merit regarding the primary issues, there was no need to examine the applicability of Notification No. 42/81.

Conclusion:
The Tribunal allowed the appeals, setting aside the impugned order, as the Department's allegations were not substantiated with sufficient evidence, and the demand was found to be time-barred.