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Issues Involved:
1. Eligibility for concessional assessment under Notification No. 223/88. 2. Permissibility of invoking the extended period for raising the demand under the proviso to Section 11A. Detailed Analysis: 1. Eligibility for Concessional Assessment under Notification No. 223/88: The appellants, engaged in the manufacture of railway locomotive parts, filed classification lists for rough alloy steel castings under Heading 7307.20/7325.20, claiming concessional duty under Notification No. 223/88. The Department argued that the items, specifically knuckle and lock, were subjected to machining and finishing operations, classifying them under Heading 86.07, thus not eligible for the concession. The appellants contended that the operations performed (boring, milling, drilling) were only for removing surface defects and did not alter the castings' essential characteristics. The Tribunal, however, found that milling, drilling, and boring are not permissible processes under the Notification as they contribute to the change in form or shape of the castings. Consequently, the disputed items were not eligible for the concessional assessment. 2. Permissibility of Invoking the Extended Period for Raising the Demand: The Department invoked the extended period under the proviso to Section 11A, alleging fraud by the appellants for reclassifying goods under Heading 7325 in invoices and gate passes after initially classifying them under Heading 8607. The appellants argued that the classification lists were approved by the Assistant Collector, who unilaterally changed the classification to Heading 8607 but maintained the concessional rate under Notification No. 223/88. The Tribunal found that the Department had full knowledge of the appellants' activities through approved classification lists and assessed RT-12 returns. Therefore, there was no willful misstatement or suppression of facts by the appellants. Following the Supreme Court's judgment in the case of Collector of Central Excise v. Chemphar Drugs and Liniments, the Tribunal held that the extended period of limitation was not sustainable, limiting the Department's period to six months. Conclusion: 1. The disputed goods (knuckle and lock) were not eligible for concessional assessment under Notification No. 223/88. 2. The Department could not invoke the extended period of limitation under Section 11A; the permissible period was only six months. Outcome: The appeal was partly allowed, confirming the ineligibility for concessional assessment but rejecting the extended period for demand recovery.
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