1997 (7) TMI 304 - AT - Central Excise

Summary

Issues:
1. Application of larger time-limit for issuing demands of duty on jute twine, gunny cuttings, and thread waste.
2. Exemption claimed by the appellants based on classification lists filed in 1978.
3. Correspondence regarding jute twine consumption and Cess payment.
4. Show cause notices issued in 1986 and 1989 demanding Cess.
5. Allegation of suppression of facts by the Department.
6. Interpretation of Cess rules and Trade Notices.
7. Shifting perspectives on Cess levy on captive consumption of jute manufactures.

Detailed Analysis:
1. The judgment concerns the confirmation of demands made by the Additional Commissioner of Central Excise for duty on jute twine, gunny cuttings, and thread waste consumed within a factory for sewing bags during the period from 1-2-1981 to 30-4-1984. The lower authority applied a larger time-limit of five years from the date of issuance of show cause notices dated 2-5-1986, 17-2-1989, and 23-2-1989, confirming the demands within this extended period.

2. The appellants argued that they had filed classification lists since 1978, claiming exemption from Cess duty based on government notifications. They also submitted an addendum in 1984 for exemption from jute manufacturers Cess. The Department had issued a show cause notice in 1986, which was later dropped based on Trade Notices clarifying Cess collection only at the point of clearance from the manufacturer's premises.

3. A letter in 1982 from the Superintendent of Central Excise raised concerns about Cess payment on jute twine, leading to correspondence between the appellants and the Department. Despite requests for information on jute twine consumption, the appellants did not provide the required details.

4. Subsequent show cause notices in 1989 reiterated demands for Cess, prompting the appellants to claim a change in Department's opinion and challenge the invocation of the larger time-limit for demand recovery.

5. The Department alleged suppression of facts by the appellants, citing lack of record maintenance for production and captive consumption of the products in question. The Additional Commissioner found that the exemption claimed did not apply to Cess under relevant laws.

6. The judgment discussed the interpretation of Cess rules, Trade Notices, and the evolving perspective on Cess levy on captive consumption of jute manufactures, highlighting discrepancies in the Department's approach over the years.

7. Ultimately, the Tribunal found no suppression of facts by the appellants, noting the changing stance of the Revenue on Cess levy over time. The appeal was allowed in favor of the appellants, with consequential reliefs granted based on the circumstances of the case.