1997 (8) TMI 146 - AT - Central Excise

Summary

Issues:
Levy of handloom cess on man-made fabrics; Time bar issue regarding the demand for non-payment of duty.

Analysis:
The appeal before the Appellate Tribunal CEGAT, New Delhi pertained to the dispute over the levy of handloom cess on man-made fabrics. The Collector (Appeals) had ruled that handloom cess was not applicable to laminated man-made fabrics falling under sub-item 22(3) of the Central Excise Tariff, as they were exempted from Central Excise duty and handloom cess. Additionally, the Collector (Appeals) found the show cause notice to be time-barred under Section 11A of the Central Excise Act, 1944, as the period of six months was computed from the date of a corrigendum issued on 5-1-1985.

The Revenue, represented by the ld. DR, appealed mainly on the issue of time bar, contending that the demand was not time-barred and needed reconsideration on the merits of whether handloom cess was applicable to the items manufactured and cleared by the assessee. The ld. DR argued that the demand for non-payment of duty was quantified in the show cause notice, including basic duty and handloom cess, despite the original notice not explicitly mentioning handloom cess. The ld. Counsel for the assessee argued that no handloom cess was leviable on man-made fabrics, citing a previous Tribunal decision. He further emphasized that the incorporation of a new ground for the levy of handloom cess in a subsequent notice rendered the entire demand time-barred.

After considering the arguments from both sides, the Tribunal found merit in the Respondents' argument regarding the time bar issue. The Tribunal noted that the original notice did not propose the levy of handloom cess, and the inclusion of this charge in a subsequent corrigendum constituted a new ground. As the corrigendum was considered the relevant notice for the levy of handloom cess, the Tribunal concluded that the demand was indeed time-barred. Therefore, the Tribunal upheld the Collector (Appeals)'s decision on the time bar issue and dismissed the appeal filed by the Revenue accordingly.