1998 (6) TMI 274 - AT - Central Excise

Summary

Issues:
1. Appeal against the order of Collector of Central Excise, Coimbatore dated 19-11-1987.

Detailed Analysis:
1. The appellants sought a decision on merits regarding the exemption from duty they were availing for the production of block boards and commercial plywood. They argued that their failure to file the required declaration for exemption was due to ignorance, and they should be pardoned for this procedural lapse. They also contended that they were eligible for exemption as their turnover was below the prescribed limit. The appellants emphasized that duty should only be levied on specific transactions, not on all goods produced.

2. The show cause notice alleged that duty was payable on certain goods dispatched from the factory to specific parties. The appellants argued that duty should only apply to outright sale of core veneers and job charges, not on all items. They claimed that their actions were not driven by mala fide intentions to evade duty, but rather by ignorance of the law. They highlighted their compliance in accounting for transactions and preparing invoices.

3. The department contended that the appellants had manufactured excisable products without a valid license, as evidenced by invoices. The duty demanded was considered payable due to the appellants' failure to follow prescribed procedures for availing exemptions. The department invoked Section 11A, stating that substantial dutiable commodities were manufactured and cleared without duty payment, justifying the demand for duty.

4. The appellants argued that the peeling of wooden logs did not amount to manufacturing under Section 2(f) of the Act. They cited relevant case law and exemptions applicable to goods manufactured on a job basis. They also challenged the invocation of an extended period for demanding duty, citing limitations based on the timing of the show cause notice and the absence of suppression of facts.

5. The Tribunal observed that the appellants' contentions had merit, emphasizing that the benefit of exemption notification should not be denied solely due to a lack of license. The Tribunal rejected the department's argument that no material was needed to sustain the invocation of Section 11A, emphasizing the necessity to prove suppression or fraud to justify an extended period for demanding duty.

6. The Tribunal found fault with the Collector's order, noting that he had acknowledged that the appellants would not have had to pay duty if they had operated under proper guidance. The Collector's decision to invoke an extended period for demanding duty and imposing a penalty was deemed erroneous. Consequently, the impugned order was set aside, and the appeal was accepted.