1998 (1) TMI 270 - AT - Central Excise

Summary

Issues:
1. Applicability of exemption Notification 228/86 to parts of Air Rifles.
2. Allegation of suppression of facts by the appellants.
3. Limitation period for demanding duty under Section 11A.

Analysis:

1. Applicability of exemption Notification 228/86 to parts of Air Rifles:
The case involved the manufacturing of Air Rifles, Air Guns, and parts thereof by the appellant. Initially, the goods were exempted, and the appellant did not hold a Central Excise License but filed declarations for exemption under Notification 111/78. With the introduction of the Central Excise Tariff Act, Air Rifles and parts were classified under specific sub-headings. The department alleged that spare parts and accessories sold by the appellants were not exempted under Notification 228/86, leading to a demand notice. However, the appellant argued that the manufacturing process detailed in their declarations indicated that parts were manufactured along with Air Rifles, and they believed the exemption for Rifles extended to parts. The Tribunal found that the appellants had disclosed the manufacturing process adequately, and the department should have made further inquiries based on the declarations. Ultimately, the Tribunal held that the appellants had not suppressed facts, and the exemption should cover the parts as well.

2. Allegation of suppression of facts by the appellants:
The Commissioner alleged suppression of facts by the appellants regarding the manufacture of parts and accessories for Air Rifles. However, the appellant contended that they had provided detailed manufacturing processes in their declarations, indicating the production of parts alongside Air Rifles. The Tribunal noted that the declarations clearly mentioned other sales even before the specific declaration for parts, suggesting no deliberate withholding of information. Moreover, representations to the Finance Ministry regarding exemption for parts and accessories further supported the appellant's case. The Tribunal concluded that the longer period for demanding duty could not be invoked due to the lack of intentional suppression, and the appellants succeeded on grounds of limitation.

3. Limitation period for demanding duty under Section 11A:
The Tribunal focused on the limitation period for demanding duty under Section 11A of the Central Excise Act, 1944. It observed that the appellants had adequately disclosed their manufacturing processes in declarations, indicating the production of parts. The Tribunal noted that the department should have conducted further inquiries based on the information provided. Additionally, the Tribunal considered the representations made to the Finance Ministry and the absence of personal penalty imposition as factors favoring the appellants. Consequently, the Tribunal set aside the impugned order, allowing the appeal based on the grounds of limitation and lack of intentional suppression of facts.