1989 (2) TMI 116 - SC - Central Excise

Whether the demand raised for a period beyond 6 months was not maintainable.? Held that - The Tribunal found that the explanation was plausible, and also noted that the Department had full knowledge of the facts about manufacture of all the goods manufactured by the respondent when the declaration was filed by the respondent. The respondent did not include the value of the product other than those falling under Tariff Item 14E manufactured by the respondent and this was in the knowledge, according to the Tribunal, of the authorities. These findings of the Tribunal have not been challenged before us or before the Tribunal itself as being based on no evidence. In that view of the matter and in view of the requirements of Section 11A of the Act, the claim had to be limited for a period of six months as the Tribunal did. We are, therefore, of the opinion that the Tribunal was right in its conclusion. The appeal therefore fails

Issues:
- Interpretation of provisions of Central Excises and Salt Act, 1944 regarding duty demand period
- Eligibility for exemption under Notification No. 80/80 and Notification No. 71/78
- Allegations of suppression of information by the manufacturer
- Time limit for raising duty demand under Rule 10 (Section 11A) of the Act
- Appeal against the order of Customs, Excise & Gold (Control) Appellate Tribunal

Analysis:
1. The appeal in question pertained to the legality of restricting the demand of duty to six months prior to the date of the show-cause notice issuance. The central issue was whether the Tribunal was justified in invoking a longer period due to alleged suppression of information by the respondent.

2. The respondent had manufactured patent and proprietary medicines and pharmacopoe preparations, availing exemption under Notification No. 80/80. However, eligibility for this exemption was contingent upon not exceeding a certain value limit for clearances of excisable goods under multiple tariff items.

3. The dispute arose from the failure of the manufacturer to include the value of certain goods cleared under Tariff Item 68 in their declaration for exemption. This omission led to a demand for duty by the Collector of Central Excise for the period in question.

4. The Tribunal's analysis focused on whether there was intentional suppression or misstatement of facts by the manufacturer to evade duty payment. The Tribunal found that the manufacturer's explanation for not including certain goods in the declaration was plausible and that the authorities were aware of the goods being manufactured.

5. The Tribunal concluded that there was no evidence of fraud or deliberate withholding of information by the manufacturer. As per Section 11A of the Act, the duty demand period could not extend beyond six months without clear evidence of fraud or suppression.

6. The Tribunal's decision was upheld by the Supreme Court, emphasizing the need for positive evidence of fraud or intentional evasion of duty to extend the duty demand period beyond six months. The Court found the Tribunal's conclusion to be justified based on the facts and circumstances of the case.

7. Ultimately, the appeal was dismissed, with each party bearing their own costs. The judgment highlighted the importance of meeting the legal requirements for extending the duty demand period and the significance of factual evidence in determining liability for duty payment.

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