1994 (1) TMI 148 - AT - Central Excise

Summary

Issues Involved:
1. Eligibility for exemption under Notification No. 85/85 and Notification No. 175/86.
2. Clubbing of clearances for determining exemption eligibility.
3. Invocation of the extended period u/s 11A for demand of duty.
4. Quantification of duty demanded.

Summary:

Issue 1: Eligibility for Exemption under Notification No. 85/85 and Notification No. 175/86
The appellants, a division of M/s. Gammon India Ltd., were denied exemption under Notification No. 85/85 for the year 1985-86 by the Collector of Central Excise, Bangalore, on the grounds that the combined value of clearances from the appellants and their subsidiary, M/s. Freyssinet Prestressed Concrete Co. Ltd., exceeded Rs. 75 lakhs during 1984-85. Similarly, the Collector of Central Excise (Appeals), Madras, upheld the denial of exemption under Notification No. 175/86 for the year 1986-87, requiring the clubbing of clearances from all factories of M/s. Gammon India Ltd. and its subsidiary.

Issue 2: Clubbing of Clearances for Determining Exemption Eligibility
The Tribunal examined whether the clearances from the appellants and M/s. Freyssinet Prestressed Concrete Co. Ltd. should be clubbed for determining exemption eligibility. The appellants argued that M/s. Freyssinet Prestressed Concrete Co. Ltd. is a separate legal entity. However, the Tribunal found that M/s. Gammon India Ltd. held 97.83% shares in the subsidiary, exercised complete control over its operations, and provided financial support. Therefore, the Tribunal held that the goods produced by the subsidiary were effectively for and on behalf of M/s. Gammon India Ltd., justifying the clubbing of clearances.

Issue 3: Invocation of the Extended Period u/s 11A for Demand of Duty
The appellants contended that the extended period u/s 11A was not applicable as they had not suppressed any facts. The Tribunal agreed, noting that there was no requirement for the appellants to declare the subsidiary relationship under the rules. The Tribunal cited the Gujarat High Court's decision in Apex Electricals Pvt. Ltd. v. Union of India, which held that non-disclosure of facts not required to be disclosed does not constitute suppression. Consequently, the Tribunal found the invocation of the extended period u/s 11A to be unsustainable.

Issue 4: Quantification of Duty Demanded
The appellants argued that the duty demanded was not quantified in the show cause notice or the impugned order. The Tribunal found that the determination of duty payable was a simple arithmetic calculation based on the clearances exceeding Rs. 75 lakhs. However, the Tribunal agreed that the quantification of differential duty could only arise after the approval of the Classification List.

Conclusion:
The Tribunal confirmed that for the purposes of exemptions under Notification Nos. 85/85 and 175/86, the clearances from the appellants and M/s. Freyssinet Prestressed Concrete Co. Ltd. should be clubbed. However, the Tribunal held that the extended period u/s 11A was not invokable due to the lack of suppression of facts. Consequently, any differential duty recoverable would be limited to the normal period of six months from the date of the Show Cause Notice. All four appeals were disposed of accordingly.