2006 (8) TMI 190 - SC - Central Excise

Tribunal allows appeal, duty demand time-barred. Verify disclosures, limit extended in exceptional cases.

COMMISSIONER OF C. EX., CHANDIGARH Versus PUNJAB LAMINATES PVT. LTD.

The Tribunal allowed the appeal, holding that the benefit of the notification should not have been denied if the product was not coated with plastic. The ... Whether extended period of limitation envisaged under the proviso appended to Section 11A of the Central Excise Act, 1944 would apply to the facts and circumstances of the present case? Held that:- It is not a case where the Respondents had not disclosed the activities of manufacturing products carried out by them by declaration or otherwise. They responded to each and every query of the Appellant, as and when called upon to do so. The authorities of the Appellant must have verified the said disclosures. At least they are expected to do so. The disclosure made by the Respondent was acceptable to them. Their bona fide was never questioned. It is not a fit case where this Court should interfere. The appeal is, therefore, dismissed. The parties shall, however, pay and bear their own costs. Issues:1. Applicability of extended period of limitation under Section 11A of the Central Excise Act, 1944.Analysis:The case involved the question of whether the extended period of limitation under Section 11A of the Central Excise Act, 1944, would apply to the circumstances of the case. The Respondent manufactured paper-based decorative laminated sheets, classified under Chapter 39 of the Custom Excise Tariff Act, while the Appellant argued it should be classified under sub-heading No. 4823.90. The Respondent disclosed the detailed manufacturing process involving various raw materials and stages. The issue of classification was considered in previous judgments, where it was held that decorative laminated sheets with a hard and rigid character fall under Chapter 39. A notice was issued to the Respondent for short payment of central excise duty, interest, and penal action, based on misstatement regarding the product description. The Respondent contended they correctly availed the concessional rate of duty and did not use plastic as an input. The Commissioner rejected the contention, leading to an appeal before the Custom Excise and Service Tax Appellate Tribunal.The Tribunal allowed the appeal, stating that the benefit of the notification should not have been denied if the product was not coated with plastic. The demand for duty was held to be time-barred under Section 11A(1) of the Act. The Court noted that the Respondent had disclosed the manufacturing process, and the Revenue did not doubt its correctness. The Court emphasized the importance of verifying disclosures made by manufacturers and held that the extended period of limitation should be applied only under exceptional circumstances. Previous judgments were cited to support the principle that concessions or facts admitted by parties should not be withdrawn during classification disputes. The Court dismissed the appeal, stating that interference was not warranted in this case, and each party was directed to bear its own costs.