2013 (4) TMI 56 - AT - Central Excise

Penalty u/s 11AC & Rule 25 of Central Excise Rules, 2001. - Respondents are manufacturers of FRP sleepers respondents supplied two consignments of FRP sleepers to RDSO without payment of duty by availing full duty exemption under Notification No. 10/97-C.E. The clearances were made against certificates given by the RDSO certifying that the items are required for R&D purposes. The department was of the view that the items supplied are not covered by the Notification and issued notice to recover unpaid duty along with interest and also for imposition of penalty. Held that - Tribunal held that the duty demand in this case is, time-barred because longer limitation period under proviso to Section 11A(1) is not invocable. The respondent had furnished the necessary information to the department intimating him that they would be clearing goods at nil rate of duty under Notification No. 10/87-C.E. to RDSO against the certificates issued by RDSO. Moreover, supplies of the goods had been made to a Government Institution without payment of duty against a written communication from the Institute. The Revenue s appeal is dismissed.

Issues:
- Interpretation of Notification No. 10/97-C.E. regarding duty exemption for FRP sleepers
- Validity of duty demand and penalties imposed by the Assistant Commissioner
- Consideration of limitation period under Section 11A(1) for duty demand

Interpretation of Notification No. 10/97-C.E.:
The case involved the supply of FRP sleepers by the respondents to RDSO without payment of duty under Notification No. 10/97-C.E. The department contended that the items supplied did not fall within the category of goods described in the notification. The Assistant Commissioner confirmed a duty demand of Rs. 1,36,576/- along with penalties. On appeal, the Commissioner (Appeals) set aside the order of the Assistant Commissioner, leading to the Revenue filing an appeal. The learned DR argued that the goods supplied were not covered by the notification, emphasizing the absence of the requisite certificate from the purchaser and the value exceeding the notification limit. However, the advocate for the respondent contended that FRP sleepers are critical items for railway tracks, supplied based on the purchaser's representation that they were covered by the notification.

Validity of Duty Demand and Penalties:
The central issue revolved around the validity of the duty demand and penalties imposed. The Tribunal noted that the show cause notice for demanding the short paid duty was issued beyond the limitation period under Section 11A(1). The respondent had provided necessary information to the Jurisdictional Range Superintendent, indicating the intention to clear goods at nil duty rate under the said notification to RDSO. Additionally, the goods were supplied to a Government Institution against a communication certifying full duty exemption under the notification for R&D purposes. The Tribunal found no basis for alleging fraud or suppression of facts against the respondent, leading to the conclusion that the duty demand was time-barred. Consequently, the impugned order was upheld, and the Revenue's appeal was dismissed.

Consideration of Limitation Period under Section 11A(1):
The Tribunal analyzed the applicability of the longer limitation period under the proviso to Section 11A(1) in the context of the case. It was established that the respondent had duly informed the authorities about the intended nil duty clearance under the notification and had supplied goods to a Government Institution with relevant certificates. As no evidence of wilful misstatement or suppression of facts was found, the longer limitation period was deemed inapplicable. Therefore, the duty demand was considered time-barred, reinforcing the dismissal of the Revenue's appeal.

This detailed analysis of the judgment highlights the key legal issues surrounding the interpretation of the notification, the validity of duty demand and penalties, and the application of the limitation period under Section 11A(1) in the case.

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