1987 (2) TMI 358 - AT - Central Excise

Appeal allowed as demand of Central Excise duty deemed time-barred under Rule 10

JENSON & NICHOLSON Versus COLLECTOR C. EX.

JENSON & NICHOLSON Versus COLLECTOR C. EX. - 1989 (42) E.L.T. 496 (Tribunal) Issues:1. Whether the demand of Central Excise duty confirmed against the appellants is barred by limitation.Analysis:The only question for decision in this appeal was whether the demand of Central Excise duty confirmed against the appellants was barred by limitation. The appellants had initially raised issues regarding the proper classification of their produce and valuation, but these were given up during the hearing. Therefore, the only issue remaining was the limitation aspect.The appellants, engaged in the manufacture of synthetic resins and varnishes, had filed a Classification List describing their product as Alkyd falling under a specific item and as exempt from duty under certain notifications. The Chemical Examiner's test results indicated the composition of the product as synthetic resin-styrenated Alkyd Resin in volatile organic solvent. Subsequently, show cause notices were issued questioning the classification of the product as varnish instead of Alkyd Resin. The appellants contended that their products were only Alkyds and resisted the show cause notices on various grounds, including limitation.The Assistant Collector and the Collector of Central Excise reviewed the matter and held that the goods were Alkyd resin blended with synthetic resin beyond the scope of the exemption notification. They also addressed the legality of the second show cause notice issued in supersession of the first one, stating that it was done to observe the principle of natural justice based on further information from the Chemical Examiner. The Collector held that there was no legal bar to issuing the second show cause notice and that all clearances of the goods were deemed provisional due to the classification not being finalized.Regarding the time limit issue, it was noted that the procedure for provisional assessment under Rule 9B was not followed in this case. The Collector held that the second show cause notice superseded the first one, and in the absence of any recourse to provisional assessment and no allegations of misstatement or suppression, the demand for duty was held to be barred by limitation under Rule 10 of the Central Excise Rules.Ultimately, the demand of duty against the appellants was set aside, and the appeal was allowed based on the finding that the demand was barred by limitation.This detailed analysis of the judgment highlights the procedural history, the arguments raised by the parties, the findings of the authorities, and the ultimate decision based on the limitation aspect of the Central Excise duty demand.