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TMI Blog2012 (9) TMI 493X X X X Extracts X X X X X X X X Extracts X X X X ..... l. According to the petitioner, no such excise duty was payable on the goods manufactured by the petitioners namely 'pistons', if the same were appropriately classified. 2. Before we enter into the arena of controversy, the facts as pleaded in the writ petition may be recapitulated : The petitioner is engaged in the manufacturing of parts and accessories of motor vehicles and tractors including trailers. One of the products manufactured and cleared by the petitioners is 'pistons' which is used in the motor vehicles. The petitioner avers that it holds a valid L-4 licence No. M/A/GZB/72, dated 28th March, 1972 falling under Tariff Item No. 34-A (Pistons) of First Schedule to the Central Excises & Salt Act, 1944. In the year 1971 in order to give a boost in the motor vehicle industry to the manufacturers of such motor vehicles covered under Tariff Item 34 of the First Schedule to the Act, and in order to assist them to increase their production, and regulate the cost, granting exemption to original equipment manufacturers in the form of remission of duties on the product falling under Tariff Item No. 34-A if used in the manufacturing of the products, the Government of India (Mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be granted a licence in the proper Form. (The concession shall, unless renewed by the Collector, cease on the expiry of the licence). (Provided that, in the event of death, insolvency or insufficiency of the surety or where the amount of the bond is inadequate, the Collector may, in his discretion, demand a fresh bond; and may; if the security furnished for a bond is not adequate demand additional security.)" 3. According to the petitioner, as per the aforesaid Rule it is the Original Equipment Manufacturer (hereinafter referred to as 'the OEM') to whom the concession becomes accruable when the procedure under Chapter-X of the Rules is to be followed by the respective OEMs and not the petitioners. By such exemption the OEMs are in a position to buy the parts to be used in the original equipment at a lower price i.e. without excise duty. The procedure further mandates that for availing of the exemption from payment of total excise duty, the OEM, under Chapter-X have to obtain a licence in Form L-6, submit surety or security bond as required, for the satisfaction of the Assistant Collector, Central Excise of their Range, apply for the CT-2 form to the proper officer of the Cen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous "specified goods" from the payment of total excise duty for the first clearance upto Rs. 5 lakhs which includes pistons (Entry 41) also. This is called clearance for home consumption whereunder alone the petitioner avails the benefits. The petitioner filed the classification list (Form-1) on 30th March, 1978 where in column 5 it was mentioned the Notification 71/78-C.E. whereunder it intended to clear goods for home consumption alongwith same inscriptions in column 6 as in previous years which was duly approved by the Assistant Collector on 3rd October, 1978. The petitioner was, accordingly, clearing goods under the aforesaid classification list by submitting the RT-12 return for the period 1978-79 showing clearance of home consumption and those given to OEMs following the procedure under Chapter-X. The Department have been allowing these clearances. During this period, the petitioner had cleared the goods worth Rs. 4,99,805/- towards home consumption and worth Rs. 41,358/- for OEMs. 5. Para 2 of the Notification No. 71/78-C.E. which has become bone of contention between the parties reads as under :- "Nothing contained in this notification shall, insofar as goods o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 895/- wrongly and irregularly through mis-statement of facts and contrary to the provisions of Notification No. 71/78-C.E., dated 1st March, 1978. It was stated in the said show cause notice that in proviso to Notification No. 71/78, dated 1st March, 1978, it has been laid down that the exemption contained under this Notification shall not be applicable to manufacturers of such goods who avail of exemption under Notification No. 101/71, dated 29th May, 1971/153/71, dated 26th July, 1971 in respect of clearances to original equipment manufacturers which were contrary to the notification. The petitioner was accordingly asked to show cause as to why duty of Rs. 99,979.10 (basic) and Rs. 4998.95 (spl.) should not be demanded from them under Rule 10 of the Central Excise Rules, 1944 on the goods cleared from 1st April, 1978 to 30th November, 1978. The petitioner submitted its reply dated 12th April, 1979 to the said show cause notice refuting the allegations made therein. The petitioner pleaded in this representation that there was no wilful mis-statement and the demand raised was illegal. According to the petitioner. Notification No. 101/71 pertains to the OEMs whereas Noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d goods for OEMs have been cleared of the value of Rs. 41,358/- without declaring the notification. However, the department has not raised any demand of duty in respect of this clearance which it states has been made without declaring the notification. The SCN therefore is bad in law. (v) The case of the department is also that by the statement in column 6 of classification list to the effect that 'this also includes the pistons meant for original equipment' it was understood by them that such goods as cleared by the petitioner under exemption upto 5 lacs would also include those meant for OEMs. Such an impression being portrayed by department is rather unbelievable and clearly an afterthought who understood everything very clearly at the time the classification was filed with it and while it approved it. However, it is submitted that even if assuming that be correct then also the department could at best have added the value of OEMs of Rs. 41358/- to the value of home consumption of Rs. 4,99,805.41 which thus total to Rs. 5,41,253.41 and could have charged duty only to the remainder of Rs. 41,253.41 after reducing therefrom th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. 11. The first question which needs to be addressed as to whether the impugned show cause notice was barred by time. It is not in dispute that Classification List was submitted on March, 1978 whereupon clearance began and show cause notice was issued on 6th April, 1979. The limitation provided is six months. Proviso to Rule 10 of the Excise Rules as it then was, provides limitation of five years for taking such an action if it is found that the manufacturer had levied or paid or had been short levied or had not been paid in full, by reason of fraud, collusion or any willful mis-statement or suppression. This Rule reads as under :- "Recovery of duties not levied or not paid, or short-levied or not paid in full or erroneously refunded. - (1) Where any duty has not been levied or paid or has been short-levied or erroneously refunded or any duty assessed has not been paid in full, the proper officer may, within six months, from the relevant date, serve notice on the person chargeable with the duty, which has not been levied or paid, or which has not been short-levied, or to whom the refund has erroneously been made, or which has not been paid in full, requiring him to show ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve already extracted para 2 of the said notification as well as Notification No. 237/79. This notification dated 30th July, 1979 amends Notification No. 71/78-C.E. and categorically provides that the same shall come into force w.e.f. 1st August, 1979. Thus, the date on which the amendment is to come into force, where-under para 2 was deleted is categorically mentioned. It, therefore, cannot be said that the Notification is only clarificatory in nature and is to be applied retrospectively. 14. So far so good. At the same time, we find some force in the arguments of the learned counsel for the petitioner that para 2 of the notification had created some confusion and for this reason it is deleted as well by the Government itself. Therefore, even when para 2 of Notification 71/78-C.E. stipulates that nothing therein shall, so far as goods in Item No. 41 are concerned apply, manufacturer of goods could avail the exemption under Notification 107/71-C.E. and 153/71-C.E., there has to be a harmonious construction of the two. We say this for the reason that the two Notifications namely 101/71 on the one hand and Notification No. 71/78 on the other hand operate in different fields. Whe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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