TaxTMI 
TaxTMI 
2000 (1) TMI 700
X X X X Extracts X X X X
X X X X Extracts X X X X
....s), falling under Chapter Heading 3926.90 (Upto Feb. '87) and then under No. 3926.90 and they failed to (1) to maintain statutory account in form RG1 under Rule 173G(4) read with Rule 53; (ii) to determine duty liability under Rule 173F and (iii) to clear the above excisable goods manufactured in their factory under a cover of valid gate pass under Rule 173G(2) showing payment of Central Excise duty due thereon during the period from Aug, 1986 to March 1989. Therefore, they were asked to show cause as to why an amount of Rs. 1,46,892.50 should not be recovered from them under Rule 9(2) of Central Excise Rules, 1944 read with Section 11A of Central Excise & Salt Act, 1944 and why penalty should not be imposed under the relevant rules. 2. In their reply dt. 25-10-1989, they stated that the condition stipulated in the above two notifications for availing exemption in respect of raw material falling under Heading Nos. 39.01 to 39.15 of Central Excise Tariff applies only to the raw material manufactured in India and that the virus of this condition is not attracted to the imported goods and in the case of imported goods, the condition is that the additional duty or counter-vaili....
X X X X Extracts X X X X
X X X X Extracts X X X X
....had been acknowledged by the department and therefore approved the classification list by granting the benefit. It is his contention that the Modvat credit was available to them on the inputs which was much higher than the duty liability and therefore, they had no intention to evade duty at all. Ld. Counsel submits that the party had paid duty for the six months period prior to the date of show cause notice and they do not wish to contest in the matter. The contest raised by the party is only pertaining to invokation of larger period and imposition of penalty. He cited Hon'ble Supreme Court judgments rendered in the case of Collector of Central Excise v. H.M.M. Ltd. as reported in 1995 (76) E.L.T. 497 (S.C.) and Cosmic Dye Chemical v. Collector of Central Excise, Bombay as reported in 1995 (75) E.L.T. 721 (S.C.). Therefore, he submits that there is no case made out by the department for confirming the duty by invoking larger period or for imposing penalty in the matter. 5. Ld. DR reiterated the departmental arguments in terms of the order passed by the lower authorities. 6. We have carefully considered the submissions made by both the sides and perused the impugned ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ws and orders are as follows :- 7. It is observed that the appellants have not pressed their case on merits and have only pleaded w.r.t. time bar and on the question of bona fide. 8. This brings to the fore two things - (i) The department's contention that the benefit of the exemption notification in question was not available to them and had been wrongly claimed deliberately (ii) the issue of time bar which has to be viewed in this context and is intertwined with the question of bona fides as we have to deal with the extended period of time. 9. The appellants letter dt. July 22, 1986 does not advance their cause in this respect because in this letter they have asked for their advance regarding classification of laminated pouches i.e. the final product and not w.r.t. the raw material for manufacturing such pouches the classification of which was important for the purpose of claiming the benefit of notification. This notification allowed the benefits only on the articles made out of goods falling under Heading 39.01 to 39.15 and the appellants had claimed the benefit in the classification list on this ground whereas now it stands admitted that the raw materia....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the department and therefore the impugned order was required to be upheld regarding confirmation of demand and imposition of penalty; And further whether Modvat aspect could be considered separately and subject to verification and satisfaction of the proper officer only, and therefore the matter was required to be remanded for this purpose ? Sd/- (S.L. Peeran) Member (J) Sd/- (S.K. Bhatnagar) Vice President 13. [Order per : P.G. Chacko, Member (J)]. - The appellants were manufacturing laminated pouches (falling under TSH 3922.90 till February 1987 and thereafter under TSH 3926.90 of the Central Excise Tariff) from imported raw material (plastic laminated film) during the relevant period (August 1986 to March 1989). In the classification lists filed from time to time since August 1986, they claimed classification of their product as above and exemption of the same from Central Excise duty under Notification No. 132/86-C.E., dt. 1-3-86 upto 28-2-88 and thereafter under Notification No. 53/88-C.E., dt. 1-3-88. Such classification lists were duly approved by the proper officer also. 14. The Department, later on, alleged that the party had m....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lants deposited duty for the period of six months preceding the date of the show-cause notice and that the Department allowed Modvat credit in respect of the same. The only issues which have survived for consideration in the appeal is whether the larger period of limitation under Section 11A of the CESA could have been validly invoked for demand of duty for the period prior to the above period of six months and whether penalty could have been validly imposed on the party. 16. Adverting to the first issue, the learned advocate has submitted that the proviso to Section 11A of the CESA could not have been invoked against the appellants in the absence of suppression of facts on their part and that the lower authority's finding of "suppression of facts with intent to evade payment of duty" is quite erroneous in as much as the party could have taken Modvat credit of the duty paid on the imported inputs and utilised the same for payment of duty on their clearances of the laminated pouches even if the benefit of exemption under any Notification was not available to them. The party had, while filing their classification lists, believed that the condition (for exemption under Notific....
X X X X Extracts X X X X
X X X X Extracts X X X X
....this presumption in the present case. The facts and circumstances of the case have hardly smacked of suppression of any material fact by the party. Since the party would, otherwise, have availed the facility of Modvat credit on their imported input, any intent to evade payment of duty on their clearances of the finished products is improbable. The Department has failed to prove existence of the elements necessary for invocation of the extended period of limitation (under the proviso to Section 11A(i) of the Act) for demanding duty. 20. In the case of Prabhu Steel Industries (Supra), the removal of the goods was in accordance with the approved classification list and there was no concealment of the material facts. The Apex Court held that the case did not fall within the ambit of the proviso to Section 11-A(i) of the Act and therefore the show cause notice (in that case) was beyond the period of limitation. In Muzzafarnagar Steels (Supra), the Assistant Collector had admittedly approved classification list, in view of which fact the Tribunal held that it could not be said that the assessee had suppressed any material fact. 21. In Cotspun Limited (Supra) a Constitutio....