1992 (4) TMI 118 - AT - Central Excise

Summary

Issues:
- Validity of demand raised by the Department under Rule 10 of the Central Excise Rules, 1944.
- Eligibility of goods for exemption under Notification 70/76-C.E.
- Allegations of mis-statement, fraud, and suppression in the show cause notice.
- Application of extended period of limitation for raising a demand.
- Correctness of classification of goods based on chemical tests.
- Jurisdiction of the officer to issue the notice under the correct rule.
- Time bar for raising the demand.
- Sufficiency of grounds for short levy in the show cause notice.

Analysis:

The judgment deals with an appeal against the orders of the Collector of Central Excise (Appeals), Bombay regarding a demand of Rs. 2,57,938.71 issued on 26-6-1979 for the period 14-10-1977 to 13-8-1978. The Department contended that the goods, Mill Board, did not qualify for exemption under Notification 70/76-C.E. due to lack of homogeneity revealed by a chemical test. The Department argued that mis-statement was apparent from the declaration of goods. The show cause notice was challenged for quoting the wrong rule, but reliance was placed on a Supreme Court judgment to support the validity of the notice under Rule 10.

The Department further argued that the respondents did not fulfill the conditions of the exemption notification and that mis-statement was evident. The respondents, on the other hand, contended that the show cause notice lacked information on why the goods were ineligible for exemption, and they disputed the allegations of mis-statement. They argued that without allegations of mis-statement or suppression, the extended period of limitation could not be invoked. The respondents cited various tribunal decisions to support their position on time bar and deliberate manipulation of records for exemption benefits.

The Tribunal observed that the show cause notice did not contain grounds for raising the demand, nor did it allege suppression, mis-statement, or fraud. The Tribunal found that the demand was time-barred and upheld the Collector's decision to set it aside. The Tribunal emphasized the requirement for allegations of suppression or mis-statement when invoking the extended time limit. As such, the Department's appeal was dismissed, and the cross objections were disposed of accordingly.

In conclusion, the judgment clarifies the necessity of including allegations of suppression or mis-statement in a show cause notice when invoking the extended period of limitation for raising a demand. The Tribunal emphasized the importance of valid grounds for raising a demand and upheld the decision to set aside the demand due to being time-barred. The judgment provides a comprehensive analysis of the legal issues surrounding the validity of the demand and the requirements for invoking the extended period of limitation under Rule 10 of the Central Excise Rules, 1944.