1999 (11) TMI 282 - AT - Central Excise

Summary

Issues:
Classification under Notification No. 88/88-C.E. for exemption, fulfillment of rural area condition, invocation of Section 11A(1) of the Central Excise Act, 1944, demand of duty, penalty imposition, limitation defense, financial viability documents, waiver of pre-deposit, early hearing of main appeal.

Classification under Notification No. 88/88-C.E. for exemption:
The applicants, a registered cooperative women's society manufacturing soaps, claimed benefit under Notification No. 88/88-C.E. for laundry and carbolic soaps manufactured in rural areas by recognized societies. The notification defined "rural area" as villages or towns with a population not exceeding 10,000. The classification list was approved, and the benefit was availed until a show cause notice in 1997 alleged non-fulfillment of the rural area condition due to the area being declared a municipal area. The Commissioner demanded duty and penalty, citing Section 11A(1) of the Act.

Limitation defense and ignorance of notification:
The assessees argued that they believed their unit was in a rural area based on a trade notice and a certificate, claiming innocence and lack of knowledge about the municipal area status. The defense contended that the department and the assessees were equally unaware of the notification, implying a limitation defense from 1991 to 1997. The tribunal found a prima facie case on limitation but noted that part of the period fell within six months of the show cause notice, limiting the defense.

Financial viability documents and waiver of pre-deposit:
The assessees requested time to provide financial viability documents, which were not immediately available. Considering the significant revenue amount and the nature of the assessees as a women's society, the tribunal granted waiver of the pre-deposit of duty and penalty, staying the recovery during the appeal proceedings. The main appeal was scheduled for final disposal at a later date for early hearing and disposal.

This judgment addresses the classification under a specific notification for exemption, the invocation of Section 11A(1) for duty demand and penalty imposition, the limitation defense based on ignorance of the notification, the significance of financial viability documents, and the tribunal's decision to grant waiver of pre-deposit and expedite the main appeal for early disposal.