1992 (9) TMI 239 - AT - Central Excise

Summary

Issues:
1. Allegation of suppression of facts regarding being a subsidiary of a holding company.
2. Eligibility for exemption under Notification 175/86.
3. Scope of show cause notice and adjudication order mismatch.
4. Approval of classification list affecting duty demand.
5. Stay petition and departmental response.
6. Interpretation of Notification 175/86 and jurisdiction of Special Bench.

Analysis:
1. The case involved an allegation of suppression of facts by the petitioners regarding their status as a subsidiary of a holding company, which could affect their eligibility for exemption under Notification 175/86. The petitioners argued that they had not suppressed this fact, as it was clearly indicated on their letterheads. They contended that the department was aware of this relationship and had directed them to pay duty based on the holding company's prices. The Collector's adjudication order went beyond the scope of the show cause notice, leading to a mismatch in the issues raised and decided.

2. The eligibility for exemption under Notification 175/86 was a crucial aspect of the case. The petitioners claimed that they were entitled to the exemption, while the department alleged that their relationship with the holding company would disqualify them. The Tribunal noted that the department's finding of suppression was based on the classification list, but other evidence and departmental decisions supported the petitioners' position. The Tribunal granted an unconditional stay on recovering the disputed duty and penalty during the appeal process.

3. The issue of the approval of the classification list was raised, with the department citing non-approval as a reason for demanding duty for a specific period. The petitioners argued that the delay in approval should not be held against them, especially for a prolonged period. The Tribunal found the department's reasons for treating different periods inconsistently to be invalid and ruled in favor of the petitioners.

4. The stay petition and the department's response were considered by the Tribunal. The department adopted the reasoning in the impugned order but acknowledged the factual correctness of the petitioners' arguments. The Tribunal ultimately decided to grant a full stay on recovering the disputed amounts during the appeal process.

5. The interpretation of Notification 175/86 and the question of the applicability of the exempted rate fell under the jurisdiction of the Special Bench. The Tribunal directed the transfer of the appeal to CEGAT, New Delhi, for further proceedings and disposal by the appropriate authority.