2000 (8) TMI 352 - AT - Central Excise

Tribunal overturns duty demand ruling, citing time-bar, appellants' bona fide belief

The Tribunal set aside the original order, ruling in favor of the appellants. The demand for excise duty on fabricated items was found to be time-barred, ... Demand - Limitation Issues:Dutiability of fabricated items - Time bar for demand - Suppression of facts - Extended period of limitation - Bona fide belief - Central Excise duty on structural items - Erection of silos, tank, piping - Manufacturing activities - Notification No. 23/86-C.E.Analysis:1. Dutiability of Fabricated Items:The appeal pertains to the dutiability of three silos, one tank, and piping fabricated by the appellants through job contractors. The central issue is whether these items are subject to excise duty.2. Time Bar for Demand:The Collector of Central Excise did not agree that the demand was time-barred and invoked the extended period of limitation. The appellants contended that the demand was time-barred, emphasizing their bona fide belief regarding non-leviability of duty on the items.3. Suppression of Facts:The central excise officers discovered the fabrication of structural items in the factory premises in 1991. The appellants argued that there was no intent to evade duty, as they believed the items were immovable property not subject to duty.4. Extended Period of Limitation and Bona Fide Belief:The Tribunal observed that the extended period of limitation was unjustified. The detailed processes involved in fabricating and installing the items raised a genuine doubt about the leviability of duty, supporting the appellants' bona fide belief.5. Central Excise Duty on Structural Items:The nature of the fabrication processes and the genuine doubt regarding the dutiability of the erected items indicated a bona fide belief by the appellants regarding the non-leviability of duty on the structurals.6. Manufacturing Activities and Notification No. 23/86-C.E.:The main manufacturing activity of the appellants was the production of Polyester Fibre. The erection of the structural items was part of their overall manufacturing facilities, and the self-removal procedure did not apply to their main product under Notification No. 23/86-C.E.7. Conclusion:The Tribunal set aside the original order based on the ground of limitation alone, finding that the allegations of suppression were not plausible. The appellants were granted relief based on the lack of justification for the extended period of limitation, supporting their bona fide belief regarding the non-leviability of duty on the fabricated items.