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of <h1>Appellant wins duty dispute due to supplier error; tribunal rules in favor, deems demand time-barred</h1> <h3>ADARSH UDYOG Versus COMMISSIONER OF CENTRAL EXCISE, PANCHKULA</h3> ADARSH UDYOG Versus COMMISSIONER OF CENTRAL EXCISE, PANCHKULA - 2012 (280) E.L.T. 118 (Tri. - Del.) Issues:1. Interpretation of Notification No. 214 of 1986 - C.E.2. Liability for duty payment post exemption of tractors.3. Challenge on the point of limitation.4. Allegations of suppression or misstatement of facts.5. Role of Jurisdictional Central Excise Authorities.6. Expectation from the job worker regarding product duty status.Interpretation of Notification No. 214 of 1986 - C.E.:The appellant, an ancillary unit of M/s. HMT, engaged in job work basis manufacturing of components and tractors under Notification No. 214 of 1986 - C.E. The raw material was sent by M/s. HMT with proper procedure, and goods were returned on the same challans. Declaration by M/s. HMT to Central Excise Authorities stated the parts would be used in dutiable tractors.Liability for duty payment post exemption of tractors:Tractors became duty-exempt from 9-7-2004, shifting duty liability to goods manufactured by the appellant. Despite this, M/s. HMT continued sending raw material to appellant on job work challans, and the appellant cleared goods to M/s. HMT without paying duty from 9-7-2004 to 31-3-2005.Challenge on the point of limitation:A show cause notice raised duty demand for the mentioned period, alleging the appellant should have cleared goods on payment of duty due to their use in exempted tractors. The appellant challenged the allegations on the grounds of limitation, which the lower authorities rejected, confirming the demand and penalties.Allegations of suppression or misstatement of facts:The appellate tribunal found no suppression or misstatement by the appellant in working with job work challans issued by M/s. HMT. The continuous declaration filed by HMT with authorities was not withdrawn, indicating no intent to evade duty, thus not justifying a longer limitation period.Role of Jurisdictional Central Excise Authorities:Despite tractors becoming exempt, M/s. HMT continued sending raw materials to the appellant under job work challans without any action from the Central Excise Authorities. The lack of guidance from authorities to either party and failure to direct M/s. HMT not to send materials under the notification led to the appellant's reasonable belief in the dutiable use of manufactured goods.Expectation from the job worker regarding product duty status:The tribunal held that the job worker cannot be expected to verify the final product's duty status and relied on the principal's declaration and actions. The failure of M/s. HMT to withdraw declarations or cease sending materials should not reflect mala fide on the appellant. The demand raised after 4-5 years was deemed barred by limitation, and the appeal was allowed with consequential relief to the appellant.
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