2000 (11) TMI 1174 - AT - Central Excise

Summary

Issues:
1. Whether the appellants are liable to pay duty on components used in the manufacture of gear boxes supplied to 100% Export Oriented Units (EOUs).
2. Whether the demand for duty is time-barred.

Analysis:
1. The appellants manufactured gear boxes and parts thereof, using components like gear box housing, pinion shaft, wheel shaft, gear wheel, etc., which were captively used in the manufacture of gear boxes. Some gear boxes were supplied to EOUs without duty payment, leading to Central Excise authorities initiating proceedings. The Collector passed an Order-in-Original demanding duty and imposing a penalty. The appellants argued that the gear boxes supplied to EOUs did not qualify for complete duty exemption. They relied on Notification No. 123/81 and an amendment to Notification No. 217/86 by Notification No. 33/92. The Tribunal noted that amendments removed the bar for concession/exemption to goods used in manufacturing for EOUs or Free Trade Zones. The Larger Bench's decision in M/s. L & T Ltd. case supported this interpretation. The Tribunal found the demand was not applicable before 1-3-92, thus ruling in favor of the appellants. The duty and penalty were set aside due to the time-barred nature of the demand.

2. The appellants contended that the Show Cause Notice issued in 1992 demanded duty for a period starting from 1987. They argued that they availed concessions based on the understanding of the law at that time, and hence, no extended period for duty demand could be invoked. The Revenue relied on a decision by the Larger Bench which contradicted the Indian Aluminium case. The Tribunal examined the amendments to Rule 57C and Notification No. 175/86, observing that the law amendments were substantive and prospective. Despite the earlier decisions favoring the appellants, the Tribunal ruled that the demand was time-barred. Consequently, the duty and penalty imposed were set aside.

In conclusion, the Tribunal disposed of the appeal in favor of the appellants, ruling that the duty demand was time-barred due to the retrospective application of relevant law amendments.