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TMI Blog1992 (7) TMI 225X X X X Extracts X X X X X X X X Extracts X X X X ..... ral Excise Rules, 1944 passed on 21-2-1984, the same Collector has disallowed the proforma credit of Rs. 2,14,125/- towards basic duty and Rs. 1,693/- towards special excise duty for the period from April 1976 to May, 1978 and has ordered the assessee to remit back either by way of a debit entry in the PLA or in cash. He has also imposed a penalty of Rs. 2,000/- under sub-rule (4) of Rule 57A of Central Excise Rules, 1944. 3. The first order in original resulted from the show cause notice dated 6-4-1979 by which the assessees were asked to show cause as to why penalty should not be imposed upon them, under the provisions of Rule 173Q and as to why Central Excise duty amounting to Rs. 43,25,221/- should not be recovered from them under Rule 9(2) of Central Excise Rules, 1944 for the contraventions of Rules 9(1), 173G(1), 173G(2) read with Rule 52A of the Central Excise Rules, 1944 on the ground that the assessee had cleared the parts of batteries falling under Tariff Item 31(3) of the erstwhile Central Excise Tariff without payment of duty for the period 16-3-1976 to 31-5-1978 for use in the manufacture of electric storage batteries cleared by availing the exemption from payment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without payment of duty from the premises of consumer working under Chapter X Procedure. They also urged that the demands were time-barred. It was further urged by them that Notifications No. 96/76, dated 16-3-1976 and No. 164/76, dated 12-5-1976 clearly stipulated that storage batteries intended to be used as original equipment parts by the manufacturers of cars and tractors did not attract payment of excise duty provided the procedure set out in Chapter 10 of Central Excise Rules, 1944 was followed. They contended that the concession granted can be enjoyed only when the batteries cleared are used on OE fitment in cars and tractors which are in a different excise classification from batteries. It was urged that this leaves no doubt that the purpose of granting this concession to the cars and tractor manufacturers was to avoid double taxation under the two excise classifications. If duty was levied on the battery parts, this double taxation will remain, thereby defeating the intentions of the above-mentioned notifications. Further by Notification No. 5/64, dated 25-1-1964, the battery parts falling under TI 31(3) had been treated as `intermediates for continuance process of manuf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Collector has held that this argument is not acceptable as the insertion of TI 31(3) in the tariff itself, indicated that the parts of storage electric batteries were dutiable but certain exemptions were given on certain specific usages like captive consumption etc. provided the end-product is to pay duty in order to avoid double taxation. He has also rejected their contention that the parts are intermediates, as they were to be considered as finished goods so far as TI 31(3) is concerned. He further held that parts of electric storage batteries and the electric storage batteries are two items under the same heading both of which were dutiable as per the schedule. Therefore, looking into different usages, they were put into different types of exemptions which had been granted to these parts under different notifications, which had bearing on each other. Therefore, the learned Collector held that it cannot be said that granting exemption to batteries cannot be restricted by paying duty on parts of storage batteries while complete exemption had been granted to electric storage batteries. He has overruled the contention of the assessee that the department had knowledge and that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acture of storage batteries, they are treated as intermediates which are not sold as such and not to be considered as finished goods and no duty was leviable. They have further contended that there was no wilful mis-statement or suppression of facts. The learned Collector after giving the personal hearing has rejected their contention by almost following the same reasons as in the previous case and has upheld the charge of wilful mis-statement and suppression of facts. 8. We have heard shri V. Sridharan, learned advocate for the appellants and Shri M.S. Arora, learned DR for the respondents, in both the appeals which were heard together for common disposal as per law. Shri Sridharan submitted that there was scope for erroneous interpretation of law and the notification as it stood at that time. The fact that the Govt. had issued a Notification No 11-C in the matter, gave a presumption that there was a genuine misunderstanding of law and hence, there cannot be a charge of wilful suppression of facts. He contended that Notification No 165/78, dated 9-9-1978 amended the previous Notification No. 5/64 deleting the requirement that final product should pay duty. Therefore, this also c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Moreover, such a plea has not been taken on the earlier occasion. Hence, we do not allow the plea to be raised at this stage. We see that the show cause notice was actually received by the appellants on 18-1-1978. Shri Kohli is justified in submitting that the demand should be restricted to the clearances between 19-5-1978 to 16-8-1978. We accept the plea" The above case refers to the same Notification No. 5/64, dated 25-1-1964 and No. 164/76, dated 12-5-1976. 11. In case of Amco Batteries (supra), the Bench again considered the same notifications. The appellants had also made a contention that the demands were time-barred on the ground that there was no suppression and all clearances were with the full knowledge of the Central Excise authorities who were in control of their factory. The RT 12 assessments had already been made and they had filed classification list giving full details. It was also urged in that case that there was strong anomaly which had to be removed through amending of Notification No. 5/64 by Notification No. 165/78-C.E., dated 9-9-1978. On this submission, the Bench has held in paras 3 to 7 as follows :- * * * * * * ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roduced and taken into use, irrespective of the quantity actually used in the coating cellophane or of the quantity of solvent recovered after coating, was liable to payment of duty under Tariff Item No. 14(III)(i). These orders were rceived only on 7-2-1973. It is clear to us that Rule 9(2) was employed only because a demand under Rule 10 would have been time-barred. But demand under Rule 9(2) cannot be issued unless the clearances were in contravention of Rule 9(1). Of this there is nothing either in the notice or in the order of the Asstt. Collector. Neither the Asstt. Collector nor the Appellate Collector said that there had been falsification or suppression as to bring in Rule 9(2) into operation. Rule 9(2) provides for penalty to be imposed for clearances made contrary to Rule 9(1). We can find no penal action against the factory. The factory was not even told it had made itself liable to penalty under Rule 9(2). It is clear, therefore that the Central Excise do not hold that the clearances were contrary to Rule 9(1). Therefore, the only appropriate rule would be Rule 10 of Central Excise Rules. Therefore, the demand must be held to be time-barred. Other arguments were adva ..... X X X X Extracts X X X X X X X X Extracts X X X X
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