Customs, Excise and Gold Tribunal - Tamil Nadu
Boopathy Engineering Works Pvt. Ltd. vs Cce on 30 August, 1999
Equivalent citations: 2000(90)ECR723(TRI.-CHENNAI)
ORDER S.L. Peeran, Member (J)
1. This appeal is against second round of the order passed by the Collector of Central Excise vide Order-in-Original No. 26/93 dated 26.3.1993 on de novo consideration. In the first round, in terms of the Tribunal's remand order, the Tribunal had given a specific remand directing the Commissioner to re-consider the plea of demands raised in the show cause notice dated 4.10.1990 being barred by time in respect of clearances made for the period 1.3.1986 to 31.3.1989 by which duty demand of Rs. 10,46,222.50 were raised. The appellants contention was that the department was fully aware of the fact of manufacture of goods inasmuch as that there was length correspondence between the party and the department on the aspect of excisability of the goods manufactured by them and therefore, there was no suppression and the Collector in the impugned order has referred to the entire correspondence and has also about the visit of the Assistant Collector of Central Excise on 5.3.1986 and having noticed the unit manufacturing excisable parts of air-conditioning and refrigeration appliances and having instructed the assessee to take out Central Excise licence and follow all the formalities. The appellants had given an undertaking on the same day to take out licence and to follow the formalities, which has not done so, but addressed a letter dated 3.9.1986 stating that the items declared to the Assistant Collector during his visit on 5.3.1986 do not fall under the items of air-conditioning and refrigeration parts and the assessee filed a declaration under Rule 174 of Central Excise Rules, claiming full exemption under Notification No. 175/86. As the department held the view that the items manufactured by the unit are parts of air-conditioning and refrigeration and the unit is not eligible for exemption under the said Notification, the Superintendent of Central Excise issued letter dated 5.2.1987 asking the unit to explain the reasons for violating the undertaking given by them on 5.3.1986 and directed the appellants to produce the records, which they did not do so. A summon was issued on 2.3.1987 directing Sri K.M. Kannan, partner to produce all the documents relating to clearance, which has not complied by the appellants. Therefore, the preventive staff visited the unit on 14.9.1988 and recovered some registers and,,some more records were given to the department by the appellants on 19.9.1988. They were called upon to produce some more documents. Sri K.M. Kannan, appeared before the Superintendent on 20.4.1989 and gave his statement. The Collector vide letter No. V/84/30/2/88-CX-II dated 23.1.1989 clarified to the assessee that they have to pay duty on all parts of air-conditioners whether assembled at site or not. The Commissioner has noted all these facts in this order and has given a categorical finding that the department was aware of the facts, however, the assessee has deliberately contravened the Rules by clearing the goods without payment of duty and with an intent to evade payment of duty.
2. Arguing for the appellants, the learned Counsel submits that nothing prevented the department from stopping the clearances and demanding duty. However, they cannot plead that the action of the appellants was an act of suppression or with an intent to evade duty. The appellants had legitimate claim under the Notification and the appellants were being called upon to pay duty. The correct procedure to be followed in this case of nature would be the department has to issue show cause notice and to stop clearances in the matter, instead, after a lapse of considered period of time from the relevant period, the department issued show cause notice dated 4.10.1990 alleging suppression, therefore, the demands are clearly barred by time and are required to be set aside.
3. The learned D.R. Sri S. Kannan reiterates the departmental view. He points out to the facts narrated by the learned Counsel and those findings which are already brought out by the Commissioner in his order and the Commissioner merely stated that there was deliberate contravention of Rules inasmuch as the appellants did not take licence, which they were duty bound to be done, therefore, to stop the clearances action could be taken through issue of show cause notice.
4. On a careful consideration of the submissions and on a perusal of the records, we are of the considered opinion that the demands raised in the show cause notice dated 4.10.1990 for the period March, 1986 to March, 1989 is clearly hit by time barred in this matter. The appellants factory was visited by the Assistant Commissioner as noted earlier on 5.3.1986 and the appellants had given undertaking, which they did not comply, instead they wrote a letter dated 3,9.1986 protesting about the payment of duty on the item, which according to them was exempted. There was a correspondence again from the department vide letter dated 5.2.1987, instead of issuing show cause notice and again kept on calling on appellants. The preventive staff visited the factory on 14.9.1988 and recovered some registers but failed to take further steps of issuing show cause notice or stopping the clearances. It is strange that instead of adopting this procedure, the Commissioner was persuading the appellants to clear the items impugned, which was not in keeping with the provisions of Section 11A. The revenue having not taken any steps to seize the goods when they were cleared at the factory gate without payment of duty cannot later absolve the responsibility and state that there was deliberate intention to evade duty. The appellants may have reasonable grounds to protest, although the party can pay duty under protest, however, it is also the duty of the department to collect duty and secure the revenue by taking such steps as provided under the Central Excise Act and Rules. Therefore, after a lapse of six months period, in terms of Section 11A there is no suppression or intention to evade duty, hence such demands are hit by time. In the present facts and circumstances of the case, the fact of the manufacture and clearance is being within the knowledge of the department, therefore, it cannot be held that the larger period is invokable.
5. In that view of the matter, we are of the considered opinion that the demands are hit by limitation and without going on merits of the case, we set aside the impugned order on this ground alone. The appeal is, therefore, allowed.
(Pronounced and dictated in the open court).