1997 (12) TMI 210 - AT - Central Excise

Summary

Issues:
- Appeal against the order of Collector of Central Excise, Indore dated 9-7-1991.
- Interpretation of Notification 23/89-C.E. for concessional rate of duty for mini cement plants.
- Dispute over the conditions for availing the benefit of the notification.
- Allegation of suppression of facts by the appellants.
- Justification of demand beyond the statutory period.

Analysis:
The appeal concerns the interpretation of Notification 23/89-C.E. for mini cement plants. The appellants, engaged in cement manufacturing, claimed exemption under the notification, which grants concessional duty rates to mini cement plants to offset higher production costs due to low capacity. The notification specifies a duty rate of Rs. 115/- per M.T. for plants with a licensed capacity not exceeding 200 M.T. per day. The appellants, manufacturing cement from both own-produced clinker and bought-out clinker, argued that the notification does not differentiate based on the clinker source. They maintained that compliance with the licensed capacity condition suffices for availing the benefit.

The department contended that the benefit under the notification applies only if cement is manufactured using specific types of kilns, which the appellants allegedly did not possess. The department emphasized that the benefit was not available for cement produced from bought-out clinker without evidence of production in the prescribed kilns. The Collector noted the appellants' failure to disclose the possibility of using clinker from another factory, deeming it a vital omission amounting to suppression of facts impacting revenue. The department justified the demand and penalty imposition based on this omission.

The Tribunal analyzed the contentions and evidence presented. It acknowledged the department's argument on the necessity of specific kilns for clinker production but found no deliberate suppression of facts by the appellants. The Superintendent's letter to the appellants, affirming the benefit application regardless of clinker source, supported the appellants' belief in entitlement to the concession. As the department failed to establish intentional evasion of duty, the Tribunal held the demand beyond six months as time-barred. Consequently, the imposition of penalty lacked justification in the absence of deliberate misrepresentation.

In conclusion, the Tribunal ruled in favor of the appellants, declaring the demand beyond the statutory period as time-barred due to the absence of intentional suppression of facts. The decision highlighted the importance of clear communication and interpretation of statutory notifications to prevent misunderstandings and unwarranted penalties.