2023 (3) TMI 1121 - AT - Central Excise

Benefit of Exemption - condition of manufacture without the use of electricity power - Eligibility for benefit under N/N. 6/2002-CE dated 1.3.2002 as amended - dipped match splints procured by the respondents were actually manufactured using electricity - invocation of extended period of limitation - HELD THAT - The department has come on appeal aggrieved by the very same order which set aside the demand on the ground that the Show Cause Notice is time-barred. The learned AR has been at pains to argue that the respondents knew that they are purchasing dipped match splints which have been manufactured using electricity and in such circumstances they ought to have obtained registration and paid excise duty. That therefore the respondents have suppressed facts - there are no substance in the argument put forward by the learned AR or in the grounds put forward in the appeals filed by the department. Interpretation of the notification - HELD THAT - There were decisions in favour of the assessee as well as the Revenue. The Commissioner (Appeals), Tirunelveli vide Order-in-Appeal dated 28.4.2005 has referred to Board Notification NO. 1/93-CX-4 dated 2.12.1993 wherein Board clarified that In the present case parts are manufactured by a manufacturer with the aid of power. Such parts manufactured with the aid of power are purchased by another manufacturer of footwear who used such parts for manufacture of foot wear without the aid of power. So long as the second manufacturer does not use any power, in or in relation to manufacture of foot wear either in his factory or in the factory of his job workers, it cannot be construed that power has been used in the manufacture of foot wear only because the raw materials bought and used by him had been manufactured with the aid of power. This case is squarely governed by Circular No.4/87 C.E. dated 19.6.87. It is discussed by the Commissioner (Appeals) that the said Circular would apply for interpretation of the notification 6/2002 and that the assessee is eligible for benefit of notification. In the present case, there are no new materials / evidence unearthed by the department which has formed the basis for determination of the duty. All the figures were available to the department as per the invoices submitted by the respondents - the invocation of extended period cannot be justified. The appeals filed by the department are dismissed.

Summary

Issues involved: Appeal against the Commissioner's order setting aside duty demand as time-barred.

Summary:

Issue 1: Time-barred Show Cause Notices
The appeals were filed against the Commissioner's orders setting aside the duty demand as time-barred. The respondents, manufacturers of safety matches, procured dipped match splints manufactured using electricity, claiming exemption under Notification No. 6/2002-CE. Separate Show Cause Notices were issued for different periods. The adjudicating authority dropped the proceedings citing time-barred notices. The department appealed to the Tribunal, arguing willful suppression by the respondents to evade duty payment.

Issue 2: Eligibility for Exemption
The department contended that the respondents were not eligible for exemption under the notification as the dipped match splints were procured using power. The respondents argued they believed they were eligible for the exemption, as they did not use power in subsequent processes. They highlighted confusion within the department and past decisions in their favor. The Tribunal noted differences in interpretation and upheld the adjudicating authority's decision that the respondents acted in good faith and that the extended period for duty demand was not justified.

Key Legal Points:
- Notification exempts goods from duty when processes are not carried out using electricity power.
- Willful suppression by respondents alleged by the department.
- Interpretational issue regarding eligibility for exemption.
- Past decisions and confusion within the department considered.
- Extended period for duty demand cannot be invoked without justification.

This judgment emphasizes the importance of good faith belief in eligibility for exemptions and the need for clear interpretation of legal provisions in tax matters.