1997 (7) TMI 278 - AT - Central Excise

Summary

Issues:
Challenging order-in-original on classification and valuation of goods; Bar on limitation period for show cause notice issuance.

Analysis:
The appeal before the Appellate Tribunal CEGAT, New Delhi challenged the Order-in-Original dated 20-10-1989 passed by the Additional Collector of Central Excise, Bombay-III. The dispute centered around the classification and valuation of rotor-stator assemblies and brake motors for the period from 1-4-1985 to 28-2-1986. The show cause notice alleged that the rotor-stator assembly should have been classified under Part I price lists instead of Part vi(b) due to comparability with brake motors, leading to a demand for differential duty and imposition of penalty under Section 11A(1) of the Central Excise Act, 1944. The appellant contended that the goods were not comparable, resisting the notice on merits and limitation grounds.

The appellant had been manufacturing electric hoists, rotor-stator assemblies, and brake motors since 1965, consistently filing separate price lists for rotor-stator assemblies and brake motors. The audit in 1979 raised an objection that the price shown for brake motors should also apply to rotor-stator assemblies, which was contested by the appellant. Despite the department's awareness of this practice since 1979, a show cause notice was issued in 1988, alleging wilful mis-declaration of prices and intent to evade duty. The Tribunal found that the appellant had acted in good faith, consistently justifying their pricing methodology, and there was no deliberate suppression of facts or misdeclaration of prices. Consequently, the show cause notice was held to be time-barred under Section 11A(1) of the Act.

Therefore, the Tribunal set aside the impugned order, allowing the appeal in favor of the appellant. The decision was based on the finding that the show cause notice was issued beyond the limitation period, rendering it invalid, and obviating the need to delve into the merits of the classification dispute between rotor-stator assemblies and brake motors.