1992 (12) TMI 129 - AT - Central Excise

Summary

Issues:
1. Interpretation of Notification No. 128/77 regarding passing on the benefit of exemption to customers.
2. Assessment of duty on the excess amount charged by the manufacturer.
3. Time-barred nature of the demand raised by the authorities.

Detailed Analysis:
1. The case involved a dispute regarding the interpretation of Notification No. 128/77, which granted a concessional rate of duty to the manufacturer of Craft Paper. The manufacturer availed the benefit of the concessional rate but did not pass on the benefit to their customers. The authorities contended that the excess duty charged by the manufacturer should be considered as part of the assessable value. The appellants argued that since the notification did not explicitly require passing on the benefit to customers, they were entitled to retain the benefit. The appellants cited the case of Modi Rubber Ltd. to support their argument. However, the authorities relied on Division Bench judgments from the Bombay High Court and the Full Bench judgment of the Karnataka High Court to support their position that the duty charged in excess should be included in the assessable value.

2. The authorities issued a Show Cause Notice to the manufacturer, alleging that they had recovered duty at the effective rate from buyers despite paying duty at a concessional rate. The Assistant Collector confirmed the demand raised, and the Collector of Central Excise (Appeals) affirmed the decision, stating that the duty recovered in excess should form part of the assessable value. The appellants challenged this decision, arguing that the benefit of the exemption was not required to be passed on to customers. The authorities, however, relied on legal precedents to support their position that the excess duty should be added to the assessable value for levy of excise duty.

3. The appellants also raised the defense of the demand being time-barred. The Collector of Central Excise (Appeals) observed that any amount pertaining to a period prior to six months from the date of the Show Cause Notice would not be recoverable due to the time-limit prescribed in Rule 10 (now Section 11A). The authorities did not find merit in the time-bar defense raised by the appellants and upheld the demand for the excess duty charged by the manufacturer. The judgment upheld the impugned Order-in-Appeal and rejected the appeal based on the legal principles established by the Division Bench and Full Bench judgments cited by the authorities.