1994 (5) TMI 69 - AT - Central Excise

Summary

Issues Involved:
1. Excisability and marketability of sub-assemblies.
2. Scope and validity of the show-cause notice.
3. Alleged suppression and mis-declaration by the appellant.
4. Time-barred demand and applicability of the larger period for demand.

Detailed Analysis:

1. Excisability and Marketability of Sub-Assemblies:
The appellant argued that the sub-assemblies on which duty was proposed are not finished goods, are not marketable, and hence, not excisable. The Collector did not provide a clear finding on the excisability of these sub-assemblies. Instead, the Collector inferred from the appellant's citations and concluded that the basic parts, not the sub-assemblies, were excisable. The Tribunal found that the department had not demonstrated that the sub-assemblies were marketable or that they constituted goods liable for duty.

2. Scope and Validity of the Show-Cause Notice:
The Tribunal observed that the show-cause notice was based on the assumption that the demands were on the sub-assemblies. The Collector, however, extended the scope to include basic parts, which was not the issue in the show-cause notice. The Tribunal held that the Collector's interpretation was incorrect and that he went beyond the scope of the show-cause notice. If the issue was with the basic parts, a separate show-cause notice should have been issued. The final order directing the appellant to provide details of basic parts was deemed out of context and beyond the show-cause notice's scope.

3. Alleged Suppression and Mis-Declaration by the Appellant:
The department alleged that the appellant willfully mis-declared and suppressed facts to evade duty, invoking Section 11A of the Central Excises & Salt Act, 1944. The appellant denied these allegations, stating that the sub-assemblies were not parts but integral to the manufacturing process of potentiometers and were not marketable. The Tribunal found that the appellant had been transparent in their correspondence and had provided necessary details in 1988, indicating no suppression or mis-declaration.

4. Time-Barred Demand and Applicability of the Larger Period for Demand:
The Tribunal noted that the department was aware of the classification and exemption issues, and the appellant had been filing classification lists regularly. The correspondence and the details provided by the appellant in 1988 indicated that there was no suppression of facts. Therefore, the Tribunal concluded that the demands were barred by time, and the larger period for demand was not applicable.

Conclusion:
The Tribunal set aside the Collector's order, concluding that the order went beyond the scope of the show-cause notice and failed to establish the marketability and excisability of the sub-assemblies. The Tribunal also held that the demands were time-barred and that there was no suppression or mis-declaration by the appellant. The appeal was allowed, and the impugned order was declared unsustainable in law.