Customs, Excise and Gold Tribunal - Delhi
Ultra Flax (P) Ltd. And Shri Rajeev ... vs Cce on 17 December, 2003
Equivalent citations: 2004(167)ELT354(TRI-DEL)
ORDER
Per V.K. Agrawal
1. The issue involved in these two appeals, arising out of a common order-in-Appeal is whether the lay flat tubings which come into existence during the manufacture of LDPE bags are leviable to Central Excise duty and whether the extended period of limitation is invokable.
2. Shri K.K. Anand, learned Advocate Submitted that the issue regarding excisability of lay flat tubing has been decided by the Tribunal in the case of A.S. Processor Ltd. Vs. CCE Chandigarh [1992 (112) ELT 706] wherein the Tribunal has held that plastic tube coming into existence at intermediate stage of manufacture of plastic bags are dutiable under Heading 39.17 of the Schedule to the Central Excise Tariff Act. He, however, submitted that the entire demand for the period from 1-4-97 to 31.3.98 is time barred as the show cause notice was issued on 25.1.99; that the Appellants were under the bonafide belief that lay flat tubes were not excisable goods and also not marketable items; that even otherwise lay flat tubes had remained all along exempted from payment of Central Excise duty; that even subsequently Notification No. 5/98 dated 2.6.98 was issued which exempted lay flat rubes from Central Excise duty; that this fact about their bonafide belief is clear from the statement of Shri Rajeev Sharma, managing Director wherein he has clearly deposed that he was under the impression that their product was not dutiable. Learned Advocate, finally, submitted that it is a settled law that in order to invoke extended period of limitation the Department has to show that there was something more than mere inaction or failure on the part of the assessee; that there were other scores of manufacturer who also did not pay the duty on lay flat tubings. He also relied upon the decision in the case of Oswal Knit India Ltd. Vs. CCE Chandigarh I, [2002 (48) RLT 915 CEGAT] and R N Oswal Hosiety Factory Vs. CCE Chandigarh [2001 (47) ELT 293] and Pee Jay Apparels Pvt. Ltd. Vs. CCE Chandigarh [2001 (145) ELT 279] wherein it has been held by the Tribunal that extended period of limitation for demanding duty is not invokable where the product was exempted from payment of duty over a period of time and thus, there was a long standing practice which resulted in the bonafide belief that no duty was payable on intermediate product.
3. countering the argument Shri P.M. Rao, learned Departmental Representative, submitted that the Tribunal has clearly held in the case of A S Processors Ltd. that lay flat tubes coming into existence at intermediate stage of manufacturing of plastic bags are dutiable; that Appellants had neither taken any registration for the manufacture of impugned product nor cleared the same on payment of duty; that it was their responsibility as a manufacturer to obtain registration and remove the goods on payment of duty; that since the goods were manufactured and Central Excise Act is a pre-requisite. If there is no fraud, collusion, wilful misstatement or suppression of facts or contravention of any provisions under Central Excise Act or Rules with intent to evade payment of duty a notice for demand of Central Excise duty for a period beyond six months can not be issued. It has been held by the Supreme Court [1989 (21) ECC 66] that something positive other than mere inaction or failure on the part of the manufacturer, conscious or deliberate withholding of information which the manufacturer knows otherwise has to be proved before he can be saddled with liability beyond a period of six months under the provisions of Section 11 A (1) of the Act. In the present matter, no such malafide intention has been brought on record. We, therefore, hold that the entire demand of duty is time barred. As the demand itself is held time barred. no penalty is imposable on either of the Appellants. Thus both the appeals are allowed.