1996 (3) TMI 227 - AT - Central Excise

Summary

Issues:
1. Whether excise duty is payable on the waste product of surplus Mono-Ethylene Glycol.
2. Whether the show cause notice issued beyond the six-month period under Section 11A of the Central Excises and Salt Act, 1944 is valid.

Analysis:

1. The appellant, engaged in manufacturing Polyester Filament Yarn, was producing and using Mono Ethylene Glycol and Di-Methyl Tetraphalate, with Methanol as a by-product and surplus Glycol as a waste product. The residuary Tariff Item 68 excluded alcohol, including alcoholic liquor for human consumption, at the relevant time. The Department issued a show cause notice demanding excise duty on the waste product of surplus Mono-Ethylene Glycol. The appellant resisted the notice on grounds of limitation and merits. The Additional Collector confirmed the notice, leading to the appeal.

2. The primary contention was the timeliness of the show cause notice under Section 11A of the Act. The Department argued for the extended period of limitation due to wilful suppression of facts in the classification lists. The appellant had not filled the second tabular form in the classification lists, mistakenly using a proforma with an error. However, before commencing manufacturing, the appellant had sought clarification from the Asstt. Collector, who confirmed that Methyl Alcohol and surplus Mono Ethylene Glycol were not covered under any Tariff Items. This clarification negated the charge of wilful suppression, rendering the longer period of limitation inapplicable. Consequently, the show cause notice was held to be time-barred.

3. Given the finding on the limitation issue, the tribunal deemed it unnecessary to delve into the merits of the case. However, the appellant had referenced a Board's Circular and a judgment of the High Court of Bombay in support of their position.

4. Ultimately, the impugned orders were set aside, and the appeal was allowed in favor of the appellant.