1999 (8) TMI 631 - AT - Central Excise

CEGAT Rules in Favor of Appellants on Central Excise Duty Time Limit Issue

The Appellate Tribunal CEGAT, New Delhi, ruled in favor of the Appellants on two key issues. Firstly, it held that Bars and Rods produced from old railway ... Not entitled to the benefit of Notification No. 202/88-C.E. - Demand - Limitation Issues Involved:1. Availability of benefit under Notification No. 202/88 for Bars and Rods manufactured from old railway materials.2. Time limit specified in Section 11A of the Central Excise Act for raising demands.Analysis:1. Availability of Benefit under Notification No. 202/88:The appeal revolved around whether the benefit of Notification No. 202/88 applied to Bars and Rods produced by the Appellants using old railway materials. The Tribunal noted that a previous decision (Vivek Re-Rolling Mills v. C.C.E., Chandigarh) had held that the input material constituted old and unserviceable re-rollable scrap, not eligible under the notification. The Appellants conceded this point but argued that the duty raised was time-barred. They cited a circular by the Central Board of Excise and Customs that classified old used rails as falling under Chapter 72, similar to angles, shapes, and sections. This led to a bona fide belief among traders that the notification applied, as supported by a Supreme Court judgment (Padmini Products v. C.C.E.). The Tribunal agreed with the Appellants' belief, setting aside the demand for central excise duty based on the availability of Notification No. 202/88.2. Time Limit under Section 11A of the Central Excise Act:The Revenue argued for an extended period of limitation due to lack of records showing the Department's knowledge during the relevant period and the Appellants' failure to seek approval for duty clearance. However, the Tribunal, referring to the Vivek Re-Rolling Mills case, considered the departmental practice of treating old railway materials as eligible inputs under the notification. This practice led the Appellants to genuinely believe in the exemption from duty. Citing the Supreme Court's stance, the Tribunal held that the demand could only be enforced for a period of six months from the show cause notice date. Consequently, the extended period of limitation invoked by the Collector was deemed unsustainable. As a result, the demand for central excise duty against the Appellants was overturned, and the appeal was allowed based on the time limit issue.This detailed analysis of the judgment from the Appellate Tribunal CEGAT, New Delhi, highlights the key issues, arguments presented, legal interpretations, and the final decision reached by the Tribunal.