1999 (2) TMI 206 - AT - Central Excise

Issues Involved:
1. Eligibility for concessional rate under Notification No. 175/86.
2. Refund claim for full duty paid clearances.
3. Allegation of collusion between appellants and Assistant Collector.
4. Invocation of longer period of limitation under Section 11A.

Eligibility for Concessional Rate under Notification No. 175/86:
The appellants, engaged in manufacturing excisable goods, paid duty at full rate for clearances from 1-4-1986 to 18-8-1986 due to lack of small scale industries registration. After registration on 19-8-1986, they sought clarification on eligibility for concessional rate under Notification No. 175/86. A refund claim of Rs. 1,61,309.90 was filed for clearances from 8-11-1986 to 31-12-1986 at full rate. A show cause notice raised a duty demand of Rs. 4,76,665.20 for crossing the prescribed limit. The Assistant Collector clarified that the limit computation starts from 1-4-1986, not registration date. The demand was dropped, and the refund claim was sanctioned.

Refund Claim for Full Duty Paid Clearances:
A non-enforceable demand-cum-show cause notice was issued for the duty demand, followed by Section 35EA(2) notice and a third notice invoking a five-year recovery period for an alleged erroneous refund of Rs. 1,61,309.90. The Collector alleged collusion between appellants and the Assistant Collector, allowing a longer recovery period. The Collector claimed collusion due to the Assistant Collector's change in opinion from pre-adjudication communication to the final order, not endorsed to the Review Cell. The appellants sought clarification on the Notification's interpretation, and the Assistant Collector provided detailed reasoning for his final order, not bound by earlier opinions. The absence of action against the Assistant Collector and lack of mala fide intent by the appellants led to the appellate tribunal setting aside the order on limitation grounds, granting relief to the appellants.

Allegation of Collusion between Appellants and Assistant Collector:
The Collector alleged collusion between the appellants and the Assistant Collector, allowing a longer recovery period. The basis for this charge was the Assistant Collector's change in opinion from pre-adjudication communication to the final order, not endorsed to the Review Cell. The appellants sought clarification on the Notification's interpretation, and the Assistant Collector provided detailed reasoning for his final order, not bound by earlier opinions. The absence of action against the Assistant Collector and lack of mala fide intent by the appellants led to the appellate tribunal setting aside the order on limitation grounds, granting relief to the appellants.

Invocation of Longer Period of Limitation under Section 11A:
The demand was confirmed against the appellants by invoking the longer limitation period due to alleged collusion between the appellants and the Assistant Collector. The Collector claimed collusion based on the Assistant Collector's change in opinion and lack of endorsement to the Review Cell. The appellate tribunal found no evidence of action taken against the Assistant Collector or mala fide intent by the appellants. The tribunal set aside the order on limitation grounds, granting relief to the appellants without expressing an opinion on the case's merits.

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