2001 (5) TMI 224 - AT - Central Excise

Electric motor parts used captively in the submersible pump sets - Exemption under Notification No. 67/86-C.E.

Summary

Issues:
1. Correctness of demand confirmed under Rule 9(2) read with proviso to Section 11A of the Central Excise Act, 1944.
2. Whether the demand is time-barred.

Analysis:

Issue 1: Correctness of demand confirmed
The case involved the appellants engaged in manufacturing submersible pump sets and electrical motors availing exemption under Notification No. 67/86 until it was rescinded by Notification No. 129/88. The concession was reintroduced by Notification No. 142/88. The appellants continued availing the benefit of the rescinded notification during the period when it was not available. The Collector confirmed the demand and imposed a penalty based on this non-compliance. The appellants argued that they were unaware of the rescission until June 1988 and had taken steps to address the issue with the authorities. The authorities, after considering the submissions and evidence, upheld the demand. The Tribunal noted that during the period in question, there was no exemption available, leading to the correct confirmation of the demand.

Issue 2: Time-barred demand
Regarding the issue of limitation, the appellants had been submitting RT 12 returns regularly, which were being assessed by the authorities despite representations against the withdrawal of the concession. The department was aware of the withdrawal of the concession, yet assessments were finalized without demanding duty. The Tribunal held that the demand was time-barred due to the department's knowledge of the concession withdrawal and the regular assessment process continuing without raising the demand within the stipulated time frame. Consequently, the Tribunal allowed the appeal based on the findings that the demand was time-barred.

In conclusion, the Tribunal ruled in favor of the appellants, holding that while the demand was correctly confirmed due to the absence of exemption during the relevant period, it was time-barred considering the department's awareness and actions regarding the concession withdrawal.