1999 (4) TMI 339 - AT - Central Excise

Summary

Issues:
Admissibility of exemption under Notification No. 223/86-C.E. for the period from 1-3-1988 to 20-7-1989; Point of limitation regarding duty demand.

Admissibility of Exemption under Notification No. 223/86-C.E.:
The appellants were manufacturing HDPE sacks/bags from HDPE woven fabrics in tubular form, and the dispute centered on the exemption under Notification No. 223/86-C.E. The Department contended that manufacturing woven sacks from HDPE tubes woven on circular looms did not qualify for the exemption. The duty demand for the period in question was upheld by the adjudicating authority.

Point of Limitation Regarding Duty Demand:
The appellant's advocate referred to a previous case where the demand was held time-barred due to the disclosure made by the appellants regarding the nature of raw materials used. He argued that similar circumstances existed in this case, emphasizing that the Department was aware of the manufacturing process. Declarations filed by the appellants and correspondence with the Central Excise authorities supported this claim. The Commissioner (Appeals) had earlier deemed a notice without jurisdiction, leading to a subsequent notice for a larger period of limitation. The advocate contended that the Department's knowledge of the manufacturing process should have precluded the extended limitation period.

Argument by the Appellant:
The advocate highlighted that the disclosure of using duty-paid HDPE tubes/fabrics in the manufacturing process was sufficient to inform the Department about the process. He stressed that the Department was aware of the manufacturing process due to previous actions and correspondence. Referring to a Tribunal decision in a similar case, he argued that the demand should be considered time-barred.

Department's Position:
The JDR for the Department argued that the mere disclosure of raw materials as HDPE tubes/fabrics was not explicit enough to indicate that they were woven on circular looms. He contended that the appellants should have clearly stated the method of weaving to avoid confusion and to prevent the misuse of the exemption Notification.

Judgment:
The Tribunal referred to a previous case involving similar circumstances and held that the appellants' declarations were clear enough to alert the Department about the manufacturing process. Emphasizing that there was no intention to evade duty payment or suppress facts, the Tribunal found the demand to be time-barred. Citing another case precedent, the Tribunal reiterated that invoking an extended limitation period when the appellants had contested earlier demands was not justified. Consequently, the Tribunal ruled in favor of the appellants, setting aside the impugned order due to the demand being time-barred.