1994 (1) TMI 168 - AT - Central Excise

Summary

Issues:
- Whether the appellants can be said to be guilty of suppression justifying the longer period of limitation for duty levy.
- Whether the appellants' communication seeking clarification absolves them from suppression allegations.

Analysis:
The appeal in question challenged an order by the Collector of Central Excise (Judicial), Madras, imposing duty on the appellant for the period 1-8-1987 to 29-2-1988 under the Proviso to Section 11A of the Central Excises and Salt Act, 1944. The issue revolved around the emergence of an intermediate product, MMAA Oil, during the manufacture of goods by the appellants. The appellant had previously communicated with the authorities on 19-6-1987, seeking clarification on the duty leviability of the intermediate product. The Collector alleged suppression by the appellants for not pursuing the matter further or filing a classification list. The Tribunal examined whether the appellants' actions constituted suppression justifying the longer limitation period for duty levy.

The appellant's counsel argued that the communication sent on 19-6-1987 to the Asstt. Collector of Central Excise (Preventive), Madras, demonstrated their bona fides. The communication detailed the manufacturing process, including the emergence of MMAA Oil, and sought clarification on duty applicability. The appellant contended that the receipt of this letter was acknowledged, and the Collector himself noted that the appellant sought clarification from the authorities. The appellant's counsel challenged the Collector's allegation of suppression, emphasizing the proactive steps taken by the appellants to seek clarity on duty liability.

The Department's representative did not dispute the existence and receipt of the appellant's communication but argued that the appellants should have pursued the matter further by filing a classification list. The Department contended that the appellants' failure to take additional steps indicated suppression, justifying the longer limitation period for duty levy. However, the Tribunal noted that the appellant's communication clearly demonstrated their intention to seek clarification on duty liability for the intermediate product, MMAA Oil. The Tribunal emphasized that the absence of mala fides was evident from the appellant's proactive approach in communicating with the authorities and seeking guidance on duty applicability.

The Tribunal, after considering the submissions and relevant legal precedents, concluded that the appellant's actions did not amount to suppression. The Tribunal highlighted the importance of establishing positive acts such as fraud, collusion, or wilful misstatement to justify duty demands beyond the standard limitation period. In this case, the Tribunal found that the appellant's communication, disclosing all relevant details and seeking clarification on duty liability, did not indicate suppression. Therefore, the Tribunal set aside the impugned order, allowing the appeal with consequential relief in accordance with the law.