1999 (4) TMI 253 - AT - Central Excise

Summary

Issues:
- Claim of exemption under Notification 175/86 for manufacturing washers, rivets, "chaplas", "pattis"
- Denial of exemption by the department on the grounds of goods being component parts of lighters
- Contention of goods being articles of general use and not parts of lighters
- Claim of limitation on the notice issued by the department
- Agreement between association and Collector on classification of certain items as parts of lighters
- Applicability of extended period of limitation under Section 11A

Analysis:
The appellants, manufacturers of washers, rivets, "chaplas", and "pattis", claimed exemption under Notification 175/86 for manufacturing gas lighters. The department proposed to deny this benefit, asserting that the goods were component parts of lighters not covered by the notification. The appellants argued that the goods were articles of general use and challenged the notice on limitation grounds, citing an agreement between the Electronic Lighter Manufacturers' Association and the Collector regarding classification. The Collector, however, determined the goods as parts of lighters, leading to the appeal.

The appellant's advocate focused the case on the limitation issue, referencing the agreement between the association and the Collector that specified certain items as parts of electronic lighters. The departmental representative supported the Collector's classification decision. A letter from the association to the Collector confirmed the agreed classification of specific items as parts of lighters. Despite skepticism about the letter's accuracy, it was considered a shield against the extended limitation period invoked in the show cause notices, as it reflected an understanding between the parties.

The Tribunal emphasized that if an assessee acted in accordance with a decision on classification made in good faith by the Commissioner and trade representatives, there was no intent to evade duty. In this context, the extended limitation period under Section 11A would not be applicable. Consequently, the Tribunal ruled that the demands were time-barred and set aside the department's order denying the exemption.