1997 (6) TMI 134 - AT - Central Excise

Summary

Issues:
- Whether the demand for duty is hit by limitation under Section 11A of the Central Excise Act, 1944.
- Whether the appellants deliberately withheld information from the department to evade duty.
- Whether the final products manufactured by the appellant qualify as goods produced with the aid of power.

Analysis:

Issue 1: Limitation under Section 11A
The appellants claimed exemption under Notification No. 179/77, stating their manufacturing activity was without the aid of power. The department alleged suppression of fact and issued a show cause notice for the period 1-4-1980 to 18-10-1985 under Section 11A. The Commissioner confirmed the demand, which was upheld by the Tribunal in an earlier order. However, a rectification application was allowed for the Tribunal to consider the limitation issue. The appellants argued that they had made declarations to the department regarding the exemption and had not suppressed any facts. The Tribunal found that the appellants had not deliberately withheld information to evade duty and limited the demand to the normal six-month period under Section 11A, as the law regarding the interpretation of "manufacture without the aid of power" was clarified by the Supreme Court only later.

Issue 2: Allegation of Withholding Information
The department contended that the appellants misled them by falsely declaring work done through a job worker. The department argued that the appellants deliberately installed a drilling machine at the job worker's residence to evade duty. The appellants claimed they had gifted the machine later, but the department argued there was a deliberate withholding of facts. The Tribunal examined various correspondences and found that while there were discrepancies in the appellants' explanations, they had not completely withheld information from the department. The Tribunal noted that the status of the job worker did not appear as independent, but the appellants had disclosed the involvement of other job workers, indicating a lack of deliberate suppression of facts.

Issue 3: Classification of Final Products
The Tribunal determined that the final products manufactured by the appellant should be considered as goods produced with the aid of power. However, considering the circumstances and the evolving legal interpretation, the demand for duty was confined to the normal six-month period under Section 11A. The Tribunal concluded that the demand for the extended period was not justified based on the totality of the circumstances in the case.

In conclusion, the Tribunal found that while the final products were produced with the aid of power, the demand for duty was limited to the normal six-month period under Section 11A, as the appellants had not deliberately withheld information to evade duty. The appeal was disposed of on these grounds.