TaxTMI 
TaxTMI 
1988 (5) TMI 39
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....ed. 2. The relevant facts are as follows :- The appellant manufactures inter alia wheels, tyres and axles of railways. The buyers of these products are the Indian Railways. Apart from this, the appellant also makes and supplies to the Indian Railways wheels and axles as composite units. These are forged products. Before the said goods are supplied to the railways the said goods after being forged are machined and polished by the appellant and as a result of this machining and polishing the excess layer of steel which is commonly referred as "excess skin" is removed; and one of the disputes is as to whether for the purpose of Item 26AA(ia) of the Central Excise Tariff set out in the First Schedule to the Central Excises and Salt Act, 1944 (referred to hereinafter as "the Central Excises Act") the weight of the steel should be calculated as at the time when the forging was complete or after machining and polishing to remove the excess skin of steel. Certain other incidental work on the said goods might have been done by the appellant, but that is not material for our purposes. The stand of the appellant was that these items were dutiable in their hands only once and under Tarif....
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....manufacture. A copy of the letter is not on record, but there is a clear reference to it in the order passed by the Collector imposing excise duties as aforesaid. The Collector rejected the stand of the appellant and held that the appellant was liable to pay differential duty under Item 26AA(ia) on the difference between weight of the said goods when forged and the weight after machining to remove the excess skin as well as the duty under Tariff Item No. 68 as set out earlier. The Collector further held that the appellant was liable to penalty of Rs. 1 lac under Rule 193Q of the Central Excise Rules, 1944 for suppression of facts or giving misleading particulars. The Collector took the view that the appellant was guilty of mis-statement or suppression of facts and hence the period of limitation for making the demand was 5 years prior to the service of the show cause notice. The Division Bench of the Delhi High Court accepted the conclusions of the Collector save and except tnai they took the view that there was no suppression or mis-statement of facts on the part of the appellant and hence the period of limitation would be only 6 months prior to the service of the show-cause notice....
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....ise duty on forged goods covered under the said entry, is according to the weight of the goods. It was contended by the appellant that the weight should be measured only after the polishing and machining at the appellant's workshop was completed. It is obvious that as a result of such machining and polishing there would be some loss weight on account of excess skin removal. It was on the other hand contended on behalf of the Revenue, the respondent herein, that the forging of the goods was complete before the machining and polishing was done to remove the excess surface or excess skin. It appears to us that the aforesaid contention of the appellant deserves to be accepted. Even to prepare forged goods for supplying to the Railways, it was essential that the goods should comply with the Railways' specifications and the excess steel on the surface or the excess skin as it is called, would have to be removed for that purpose. Moreover, as pointed out by learned single Judge of the Delhi High Court, in Metal Forgings Pvt. Ltd. & Another v. Union of India and Others [1985 (20) E.L.T., p. 280 at paragraph 12] :- "The process of manufacture of forged products consists of cutting of ste....
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.... Railways' workshops for being used by the Railways. It must be regarded as common ground that duty under Item No. 26AA was payable on the forged products and duty under Tariff Item No. 68 was payable only at the stage of the completion of the manufacture of the finished goods, namely, axles, wheels, tyres and so on. The certificate issued by A.K. Malhotra, Additional Director, Railways (Stores) clearly states that the goods supplied by the appellant to the Indian Railways and manufactured at its plant at Jamshedpur are manufactured according to specifications and drawings agreed to between the parties. Axles are supplied to the railways in rough machined condition and wheels, tyres and blanks are supplied in as "rolled/as forged" condition. These wheels/tyres, axles and blanks have to be sometimes rough machined partially to remove excess steel or manufacturing defects. These products are subsequently precision machined by the Railways at their workshops before being put to use to meet the actual requirements of the Railways. There is no challenge to the correctness of this certificate either before the Collector or before the Trial Court and there is no reason as to why it should....
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....nths from the relevant date, serve notice on the person chargeable with that duty. This provision would clearly show that the period for which the demand could be made was only six months prior to the service of the notice. Now, in the present case, it has been found by the High Court and, in our opinion, rightly, that there was no suppression or mis-statement of facts or fraud by the appellant to which the alleged short levy or non-levy could be attributed. In fact, it is common ground that right from 1962 the appellant was filing classification lists containing the description of the items and showing them as liable to the payment of excise duty only under Item No. 26AA(ia) and these lists were accepted and approved by the excise authorities. In these circumstances, we fail to see how it could be said that the appellant was guilty of any suppression or mis-statement of facts or collusion or violation of the provisions of Central Excises Act as contemplated under the proviso to Section 11A of the said Act. In view of this, the period of limitation would clearly be only six months prior to the service of the show cause notice. The demand for excise duty against the appellant on the....