Duty on exported intermediate goods and limitation turns on disclosed RT 12 facts and verified export evidence.

Duty on sal stearine cleared as covo and exported under a rebate claim required verification of the export particulars before any final demand could be sustained, because the trade notice on intermediate goods used in exported manufacture was treated as equally relevant to the rebate route. The record showed RT 12 returns, gate passes and rebate claims, so the issue turned on verifiable evidence of manufacture and export. The first three show cause notices were barred by limitation, as the relevant facts had already been disclosed in the RT 12 returns and there was no suppression or clandestine removal to justify the extended limitation period.

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Issues: (i) whether duty was payable on sal stearine cleared as covo and exported under claim for rebate, and (ii) whether the first three show cause notices were barred by limitation.

Issue (i): whether duty was payable on sal stearine cleared as covo and exported under claim for rebate

Analysis: The product in dispute was sal stearine emerging during processing of raw sal oil. The processing resulted in two streams, one used in manufacture of soap and the other exported as covo. The Trade Notice relied upon by the assessee stated that no duty need be collected on intermediate goods produced and used in the same factory in the manufacture of finished excisable goods exported under bond. The reasoning applied to the export facility under rebate as well, since the practical object of both routes was the same. The record also indicated that RT 12 returns contained particulars of manufacture and export, with reference to gate passes and rebate claims, and the verification of those facts remained necessary.

Conclusion: The duty demand on covo could not be finally sustained without verification of the export particulars and was required to be reconsidered on the basis of verifiable evidence.

Issue (ii): whether the first three show cause notices were barred by limitation

Analysis: The demand for the initial period was based on particulars already disclosed in the RT 12 returns filed by the assessee. In that situation, clandestine removal and suppression of facts were not made out, and the longer limitation period could not be invoked. The absence of penalty also supported the view that the case did not justify extended limitation.

Conclusion: The first three show cause notices were barred by limitation.

Final Conclusion: The assessee succeeded on limitation for the earliest demands, while the substantive duty question on exported covo was left for fresh determination on verified facts after giving an opportunity of hearing.

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