1992 (4) TMI 57 - HC - Central Excise

Summary

Issues Involved:
1. Interpretation of Notifications for Concessional Duty.
2. Limitation Period for Duty Recovery.
3. Allegations of Mis-statement and Suppression of Facts.
4. Penalty Imposition under Rule 173.

Summary:

1. Interpretation of Notifications for Concessional Duty:
The petitioner company, manufacturing white printing paper, claimed a concessional duty rate of 5.5% ad valorem on paper supplied to the Director General of Supplier and Disposal (DGS&D) and for educational purposes, as per Notification No. 68/76-C.E. and 69/76-C.E., dated 16-3-1976. The Collector concluded that the notifications entitled concessional duty only if the actual wholesale price did not exceed Rs. 2,750/- per metric tonne. The court held that the petitioner was entitled to the concessional duty rate on the entire stock supplied to DGS&D and educational institutions, but only on the sum of Rs. 2,750/- per metric tonne, as the subsequent processes of cutting and ruling did not alter the paper's character.

2. Limitation Period for Duty Recovery:
The petitioners argued that u/r 10(1) of the Central Excise Rules, 1944, the Revenue could claim duty only for six months prior to the date of the show cause notice. Notices were issued on 6-4-1978 and 2-9-1978, making the duty prior to 5-10-1977 and 3-3-1978, respectively, barred by limitation. The respondents contended that due to mis-statements and suppression of facts, the recovery period extended to five years u/r 10(1) proviso. The court found no evidence of mis-statement or suppression, thus applying the six-month limitation period and setting aside the Collector's findings.

3. Allegations of Mis-statement and Suppression of Facts:
The court examined the evidence and found that the petitioners had filed the necessary classification lists, returns, price lists, and invoices, all approved by the Excise Department. The alleged mis-statements or suppression were not mentioned in the show cause notices. The court concluded that the Revenue's findings of mis-statement and suppression were without evidence and perverse, noting that mis-statements and suppressions relate to factual information, not legal interpretation.

4. Penalty Imposition under Rule 173:
Since the court determined there was no mis-statement or suppression by the petitioners, it held that the petitioners were not liable to any penalty u/r 173 of the Central Excise Rules. Consequently, the court quashed the impugned order regarding the petitioners' tax liability for the specified periods and the penalty imposed by the Collector.

Conclusion:
The court allowed the petition with costs, making the rule absolute, and quashed the show cause notices and the impugned order of the Collector. The petitioners were entitled to the duty concession of 5.5% on the white paper supplied to DGS&D and educational institutions, limited to Rs. 2,750/- per metric tonne.