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Issues: (i) Whether the product manufactured by the respondent was eligible for concessional rate of duty under Notification No. 63/87-C.E. for the relevant period; and (ii) whether the show cause notice was barred by limitation for want of suppression so as to attract the extended period under Section 11A(1).
Issue (i): Whether the product manufactured by the respondent was eligible for concessional rate of duty under Notification No. 63/87-C.E. for the relevant period.
Analysis: The notification granted concessional duty to textile fabrics, impregnated, coated, covered or laminated with plastics falling under sub-heading 5903.19, at a specified rate plus the duty leviable on the base fabrics under Chapter 52, if not already paid. The finished goods in question fell under sub-heading 5903.19 and the base fabric was cotton. The fact that the base cotton fabric used by the respondent did not itself fall under Chapter 52 did not take the goods out of the notification, because the notification fixed the duty on the finished product by reference to base fabrics of cotton and the duty already paid on such base fabrics.
Conclusion: The respondent was entitled to the concessional rate of duty under Notification No. 63/87-C.E.; the objection raised by the Revenue failed.
Issue (ii): Whether the show cause notice was barred by limitation for want of suppression so as to attract the extended period under Section 11A(1).
Analysis: The record did not establish concealment of material facts by the respondent. The authority below had found that there was no basis for invoking the proviso to Section 11A(1), and that finding was sustained. In the absence of suppression, the extended period could not be applied against the respondent.
Conclusion: The show cause notice was time-barred and the extended period under Section 11A(1) was not available to the Revenue.
Final Conclusion: The reference was answered in favour of the respondent and the Revenue's appeal failed on both the duty exemption and limitation questions.
Ratio Decidendi: Where an exemption notification fixes duty on finished goods by reference to the nature of the base fabric and the duty already paid on such base fabric, eligibility cannot be denied merely because the base fabric does not independently fall under the chapter mentioned for base fabrics, and in the absence of suppression the extended limitation period cannot be invoked.
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