1995 (7) TMI 160 - AT - Central Excise

Summary

Issues Involved:
The appeal against the Order of the Collector of Central Excise confirming duty demand based on lean gas supply to M/s Kribhco Fertilizers and the issue of limitation.

Issue 1: Duty Demand on Lean Gas Supply
The appellant filed a classification list for lean gas, approved by the Assistant Collector, indicating nil duty under Notification 175/85. The gas supplied to M/s. Kribhco was intended for fertilizer manufacture, but the classification list did not specify use outside the factory. The appellant informed the Department of lean gas production and exemption claim before the period in question. The Superintendent's letter in March 1988 initiated the enquiry, to which the appellant promptly responded with details of gas supply to Kribhco. Despite the Department's awareness of the gas supply, the show cause notice was issued over 2 years later in 1991. The delay in issuing the notice, coupled with the appellant's cooperation and lack of wilful suppression, led to the conclusion that the appellant did not intend to evade duty.

Issue 2: Limitation
The appellant, a Commission under the Central Government, supplied gas to a public sector undertaking for fertilizer production, indicating no benefit from evading duty. Referring to the Rainbow Industries case, the Tribunal emphasized the need for wilful suppression and intention to evade duty for the extended period to apply. Finding no intention to evade duty or wilful suppression, the Tribunal held the demand barred by limitation. Consequently, the Collector's Order confirming duty and penalty was set aside, allowing the appeal.