1996(02)LCX0034
IN THE CEGAT, SPECIAL BENCH `C’, NEW DELHI
S/Shri G.P. Agarwal, Member (J) and Shiben K. Dhar, Member (T)
GARWARE PAINTS LTD.
Versus
COLLECTOR OF CENTRAL EXCISE, BOMBAY-III
Order No. 134/96-C, dated 28-2-1996 in Appeal No. E/4567/89-C
Cases Quoted
Jaishri Engg. Co. (P) Ltd. v. Collector — 1989 (040) ELT 214 [Para 3]
V.K. Woollen & Silk Mills v. Collector — 1988(11)LCX0059 Eq 1989 (043) ELT 0686 (Tribunal) [Para 5]
Advocated By : None, for the Appellant.
Shri J.M. Sharma, JDR, for the Respondents.
[Order per : Shiben K. Dhar, Member (T)]. - This appeal is directed against Order No. 67/89, dated 18-9-1989. Demands of Rs. 4,27,602.74 and Rs. 1,15,360.40 relating to the period June 1971 to March 1973 and April 1973 to February 1974 respectively have been confirmed by the Additional Collector on the ground that the product declared as alkyd resin falling under Tariff Item 15A, as it then existed, was not entitled to the benefit of exemption under Notification No. 122/71.
2. None present for the appellants when the matter was called on. The appellants have, however, requested for decision on merits.
3. Arguing for the respondent, the DR submits that the product which were declared as alkyd resin was on subsequent enquiry found to be polyester resin and was not eligible to exemption. Since the appellants had misdeclared the product the demand for the larger period was correctly invoked and was not time barred. In this connection he cites the case reported in 1989 (040) ELT 214.
4. Heard the D.R. and perused the records of the case.
5. The period involved in this case runs from June, 1971 to February, 1974 and is covered by two show cause notices, one dated 5-3-1975 for the period from June 1971 to March 1973 for Rs. 4,27,602.72 and the other dated 6-3-1975 for the period from April 1973 to February 1974 for a sum of Rs. 1,15,360.40. Both the show cause notices have been issued under Rule 10A. Earlier a show cause notice was issued on 18-6-1973 for the period from June 1971 to March 1973 for a sum of Rs. 4,27,602.72 which was subsequently withdrawn and the Department reserved the right to issue of show cause notice at a later stage. The appellants in the Appeal Memo. have contended that the assessments were finalised and even bank guarantees were returned as discharged. The A.C. adjudicated the demand against which an appeal has been filed before the Collector (Appeals) who remanded the case to the Assistant Collector for de novo adjudication on the ground that the appellants product be tested by the Chief Chemist, Delhi. The Additional Collector, however, has observed that this direction could not be complied with because they have already stopped manufacture of this product as early as in 1974. Because of this no sample of this product could be drawn. Appellants in the Memo. of Appeal have relied upon the decision of the Tribunal in the case of N.K. Wollen & Silk Mills v. Collector of Central Excise, 1989 (043) ELT 686 wherein the Tribunal held that the adjudicating authority was obliged to carry out the directions of the appellate authority and he should have either tested the remnant samples or in the event of there being no remnant samples available he should have extended the benefit of doubt to the appellants. It was not open to him to ignore the directions contained in the Order-in-Appeal. Apart from this we observe that the demands for the period June 1971 to March 1973 was issued on 5-3-1975 and for the period April 1973 to February 1974 was issued on 6-3-1975. In between the demands have already been withdrawn during the relevant period. This clearly indicates that the Department itself was in doubt about the classification of the product. In such situation the short levy, if at all, was the result of mis-construction on the part of the officers and in this context Rule 10 alone and not Rule 10A was applicable. Thus without going into the merits of the case we hold that the demand was time-barred. We therefore set aside the impugned order and allow the appeal.
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Equivalent 1996 (84) ELT 118 (Tribunal)