1997 (6) TMI 100 - AT - Central Excise

Summary

Issues:
1. Interpretation of exemption Notification 226/77 regarding duty concession for drill cloth.
2. Applicability of limitation period under Section 11A of the Central Excise Act.
3. Calculation and justification of the demanded duty amount.

Interpretation of Exemption Notification:
The case involved a composite textile mill manufacturing drill cloth eligible for a 50% duty concession under Notification 226/77. The dispute arose when the Commissioner initiated proceedings against the appellants, alleging non-conformity with the Textile Commissioner Notification of 1968, questioning the eligibility for the concessional rate. The Tribunal's decision supported the appellants' claim that their 4-harness drill was covered by the notification. The Commissioner confirmed a demand for drills other than grey, bleached, or dyed, while dropping the demand for the mentioned types. The crux of the issue was the interpretation of the notification and whether the appellants' drill cloth qualified for the duty concession.

Applicability of Limitation Period:
The appellants argued that the demand confirmed by the Commissioner was time-barred under Section 11A of the Central Excise Act since the notice was issued in 1981 for the period between 1978 and 1979. They relied on a Commissioner (Appeals) decision stating that grey, bleached, or dyed drill cloth was exempt regardless of meeting the controlled drill description. The appellants contended that the demand beyond the six-month period from the show cause notice issuance was improper. However, the Tribunal noted that in cases of provisional assessment, the limitation runs from the finalization of assessment, not from the issuance of the notice. Thus, the limitation argument was rejected, emphasizing the need for clarity on the calculation of the demanded duty amount.

Calculation and Justification of Demanded Duty Amount:
The Tribunal scrutinized the show cause notice, revealing that the demand was based on non-conformity with the Textile Commissioner Notification 1968 and the failure to pay the differential duty after final assessment. The notice invoked Rule 9B, Rule 10 of Central Excise Rules, and Section 11A of the Central Excise Act. While rejecting the limitation argument, the Tribunal sought clarification on how the duty amount for drills not covered by the Textile Commissioner Order definition was determined. The appellants were entitled to a breakdown of the calculation to understand the basis of the demanded duty. The Tribunal directed the department to provide necessary clarifications to ensure transparency and understanding of the duty calculation process for the appellants.