2000 (6) TMI 227 - AT - Central Excise

Summary

Issues:
Department's appeal against Order-in-Original invoking extended period of limitation. Allegation of wilful suppression with intent to evade payment of duty. Classification of products under Notification No. 120/84. Applicability of extended period under Section 11A(1) for demand of duty.

Analysis:
1. The Department appealed against the Order-in-Original where the Commissioner Central Excise, Meerut held that the extended period of limitation was not invokable due to lack of proof of wilful suppression with intent to evade duty. The respondents were manufacturing lubricating oil additives, PTFE greases, and coolant without proper registration, claiming exemption under Notification No. 120/84. The Department alleged wilful suppression, leading to a show cause notice and demand of duty on engine coolant for 5 years.

2. The Department argued that the respondents misrepresented their products as lubricating oils to evade duty, while the respondents contended they were manufacturing specialized lubricating oils with added chemicals for enhanced properties. The dispute revolved around the correct classification of products under the exemption notification and the applicability of the extended period of limitation under Section 11A(1) for duty demand.

3. The respondents maintained that there was no suppression or misstatement, emphasizing the technical aspects of their manufacturing process. They argued that the Department should have verified the technical correctness of their declaration before invoking the extended period of limitation. The respondents' products contained a high percentage of lubricating oil and were suitable for direct use in engines.

4. During the proceedings, the Department failed to provide new information justifying the delayed invocation of the extended period. The Commissioner's decision highlighted that the Department's duty to verify declarations did not diminish, and inability to verify at the declaration stage did not warrant later invocation of extended period under Section 11A(1).

5. The Tribunal referenced a Supreme Court decision to emphasize that mere omission, not a must-do action, does not constitute suppression when both parties are aware of the facts. Ultimately, the Tribunal rejected the Department's appeal, affirming the Commissioner's decision that the extended period was not applicable due to lack of evidence of wilful suppression to evade duty.

This detailed analysis covers the key issues raised in the legal judgment, focusing on the Department's appeal, allegations of suppression, classification of products, and the applicability of the extended period of limitation under Section 11A(1) in the context of duty demand.