1998 (7) TMI 206 - AT - Central Excise

Summary

Issues:
1. Duty short paid on clearances of metallised plastic films.
2. Eligibility for concessional rate of duty under specific notifications.
3. Imposition of penalty for contravention of rules.
4. Process of metallising as manufacturing.
5. Extended period of limitation for invoking.

Analysis:
1. The case involved a demand of Rs. 6,75,124.22 against the appellants for duty short paid on clearances of metallised plastic films during a specific period. The issue was whether the appellants, a registered SSI Unit, were eligible for the concessional rate of duty under Notification No. 269/86 and Notification No. 53/88. The adjudicating authority imposed a penalty of Rs. 50,000 for contravention of relevant rules and invoked the extended period of limitation.

2. The main contention from the learned Counsel was that the process of metallising did not amount to manufacturing. It was argued that the extended period of limitation should not apply as the appellants had consistently provided accurate information in their returns. On the other hand, the learned SDR argued that metallising constituted manufacturing as the resulting product had different characteristics. The SDR also highlighted that the appellants had misstated the classification of the imported films.

3. The Tribunal carefully considered both arguments. While the appellants had inaccurately stated the classification of the metallised films in their documents, they regularly filed returns indicating the correct classification of the imported films. The Tribunal referred to a Supreme Court judgment to emphasize that when facts are known to both parties, a mere omission does not constitute suppression. Additionally, a Circular issued in January 1989 clarified the duty rate applicable to metallised films, supporting the appellants' claim that there was room for doubt in the matter prior to the clarification.

4. Based on the above analysis, the Tribunal concluded that the appellants were not guilty of suppression or misstatement with intent to evade duty. Therefore, the extended period of limitation was deemed inapplicable, leading to the setting aside of the impugned order and allowing the appeal without delving into the merits of the case.