1992 (4) TMI 159 - AT - Central Excise

Summary

Issues: Interpretation of Clause 4 of Notification 83/83-C.E., applicability of exemption, time limit for demand, eligibility for benefit under Notification 74/78

Interpretation of Clause 4 of Notification 83/83-C.E.:
The appeal involved the interpretation of Clause 4 of Notification 83/83-C.E., dated 1-3-1983. The appellants, manufacturers of paints and varnishes, claimed exemption under this notification for the financial years 1983-84 and 1984-85. The issue was whether the appellants were entitled to exemption under the notification despite exceeding the clearance value limit of Rs. 25 lakhs during 1984-85.

The Tribunal analyzed the language of Clause 4, which states that the exemption shall not apply if the aggregate value of clearances exceeds Rs. 25 lakhs during the financial year. The Tribunal referred to a previous case to support the view that exemption is admissible only if clearances do not exceed the specified limit in the relevant financial year. The Tribunal rejected the appellants' argument that the phrase "the financial year" in the notification referred to the preceding financial year, emphasizing that the phrases "preceding financial year" and "the financial year" were distinct and not interchangeable. Consequently, the Tribunal held that the appellants were not entitled to the benefit of exemption under Notification 83/83.

Time Limit for Demand:
Regarding the time limit for the demand, the Tribunal held that the demand could only be sustained for a period of six months before the show cause notice was issued. In this case, the demand for differential duty from April to November 1984 was held to be within time, starting from June 1984 onwards. The Tribunal noted that since the notice did not allege suppression, the demand was considered timely only from June 1984.

Eligibility for Benefit under Notification 74/78:
The appellants also argued for the benefit under Notification 74/78, which grants a concessional rate of duty subject to specific conditions. The Tribunal remanded the issue of determining the appellants' eligibility for this benefit back to the Assistant Collector of Central Excise. The Tribunal directed the Assistant Collector to assess whether the conditions stipulated in the first and second provisos of Notification 74/78 were satisfied by the appellants, as the lower authorities had not addressed this aspect adequately.

In conclusion, the Tribunal ruled that the appellants were not entitled to the exemption under Notification 83/83, the demand was sustainable only for a specific period, the proviso 3 to Notification 74/78 did not apply, and the eligibility for the benefit under Notification 74/78 needed further examination by the Assistant Collector. The appeal was disposed of accordingly.