1996 (12) TMI 174 - AT - Central Excise

Summary

Issues:
1. Interpretation of Notification No. 231/87 regarding availing money credits for denatured spirit.
2. Jurisdiction of the Assistant Collector to adjudicate the case.
3. Barred by limitation - period for issuing show cause notice.

Interpretation of Notification No. 231/87 regarding availing money credits for denatured spirit:
The appeal involved a dispute regarding the entitlement to money credits for denatured spirit used in manufacturing PVC Resin. The appellants claimed the credits based on Rule 57K of CER read with Notification No. 231/87. The jurisdictional officer raised concerns about the denaturant content in the denatured spirit and issued a show cause notice proposing disallowance of credits. The Collector (Appeals) held that the term 'ethyl alcohol' in the notification should be understood as per the Tariff description, allowing the proportionate money credit for the denaturant content. However, the department challenged this interpretation, arguing that the notification only referred to ethyl alcohol and did not include the denaturant content. The Tribunal, after considering the submissions, held that the notification strictly referred to ethyl alcohol, and the benefit of doubt in case of ambiguity should favor the Government. Therefore, the money credit was deemed available only for the ethyl alcohol content and not the denaturant.

Jurisdiction of the Assistant Collector to adjudicate the case:
The department challenged the jurisdiction of the Assistant Collector to adjudicate the case, citing Board's instructions related to offense cases involving goods liable to confiscation or penalty. The Collector (Appeals) clarified that the issue in question pertained to the disallowance of money credit under Rule 57P of Central Excise Rules, not falling under the purview of the mentioned instructions. The Tribunal did not delve into this issue further, as the main focus was on the interpretation of the notification and the entitlement to money credits.

Barred by limitation - period for issuing show cause notice:
The appellants contended that the entire demand was time-barred, as the show cause notice was issued after six months. The Collector (Appeals) did not address this aspect, but the Assistant Collector argued that the three-year period under the Limitation Act was reasonable. The Tribunal referred to a Supreme Court case and established that in the absence of a prescribed limitation period, a reasonable period of six months should be considered. As there were no allegations of suppression, fraud, or misstatement in the notice, the demand was held to be barred by limitation. Consequently, the appeal was disposed of, acknowledging the maintainability of the demand but ruling it as time-barred.