1997 (1) TMI 159 - AT - Central Excise

Summary

Issues:
1. Whether the appellant is entitled to the benefit of exemption under Notification No. 178/83.
2. Whether the demand for duty is barred by limitation.

Analysis:

Issue 1:
The appellant contended that the yarn in question should be entitled to the benefit of exemption under Notification No. 178/83 as it was imported under the DEEC Scheme and intended for export. The appellant argued that subsequent amendments to the notification were clarificatory and should have retrospective application. The Commissioner, however, confirmed the duty demand, stating that the exemption under the notification would not apply since the yarn was cleared under the DEEC Scheme without payment of duty. The appellant also mentioned that it had informed the Custom House about the processing of the yarn and believed that no duty was payable on exported goods. The Board's circular supported the appellant's position that exemptions to finished goods cannot be denied when the inputs are exempted from duty. The Tribunal found that the appellant acted in good faith and did not suppress facts with the intent to evade duty. Hence, the appellant was entitled to the benefit of the exemption, and the demand for duty was not justified.

Issue 2:
Regarding the limitation period for the duty demand, the notice alleged that the appellant willfully refrained from filing a declaration about the processing of the yarn, invoking an extended period of five years. The Commissioner found that the appellant suppressed the fact of texturising the yarn. However, the Tribunal held that there was no intent to evade duty established by the appellant. Citing previous Supreme Court judgments, the Tribunal emphasized that the extended period under Section 11A can only be invoked in cases of suppression with intent to evade duty. Since the appellant did not willfully suppress the production of dutiable goods, the extended period was not applicable, and the notice was barred by limitation. Consequently, the appeals were allowed, and the impugned order demanding duty was set aside.

In conclusion, the Tribunal ruled in favor of the appellant, holding that they were entitled to the exemption under Notification No. 178/83 and that the demand for duty was barred by limitation due to the lack of intent to evade duty.