1. This is an appeal filed by the appellants against the order dated 10-5-1983 passed by the Collector of Central Excise, Jaipur.
2. On 10-3-1980, a show cause notice was issued to the appellants on the ground that their clearances during 1978-79 exceeded Rs. 15 lakhs, that they have availed exemption under Notification No. 71/78 without filing a declaration and that a duty of Rs. 25,000/- towards B.E.D. and Rs. 1,250/- S.E.D. was payable by them. The Collector passed orders in Order No. 15/80-CE (C. No. V(33-B)1515/l/CE.II/79 dated 8-11-80) directing the appellants to pay the appropriate duty. In their appeal to Central Board of Excise & Customs, the appellants contended that they have been filing classification lists which were approved by the department and that the non-filing of the declaration was only a technical error. The Board held that the time-limit applicable for the demand of duty should be six months under Rule 10 of the Central Excise Rules, and since the Collector had not gone into the question of the non-availability of exemption, the matter was remanded for further enquiry. The Board, however, observed that that question of time bar would not be applicable if the turn over had exceeded Rs. 15 lakhs.
When the matter came up for hearing, it was urged before the Collector that the total value of the goods cleared during 1978-79 was Rs. 15,85,730.40 out of which goods worth Rs. 1,29,842.95 had been cleared on behalf of their loan licensee, M/s. Progressive Industrial Corporation. It was further contended that Notification No. 305/77 dated 5-11-77 granted exemption to the loan licensee from taking out a licence and since M/s, Progressive Industrial Corporation held a Central Excise licence, they were not required to comply with the conditions laid down in the said Notification. The Collector was of the opinion that M/s. Progressive Industrial Corporation neither claimed nor availed of any exemption under Notification No. 71/78-CE dated 1-3-78, and they have paid duty for their entire production/clearances, which do not include goods of the value of Rs. 1,29,842.95. He, therefore, found that the appellants are liable to pay Central Excise duty amounting to Rs. 25,000/- Basic Excise Duty and Rs. 1,250/- Special Excise Duty. Shri Sethi, Consultant, appearing on behalf of the appellants, argued that the Collector had rejected their contention on the ground that the classification list did not indicate that a portion of the goods were being manufactured on behalf of the loan licensee. In answer to this objection, Shri Sethi urged that columns 4 and 5 of the classification list had been filled by the Sectoral Officer and all the necessary particulars have been furnished with the approval/of the authorities. He also urged that the RT-12 returns for the relevant months indicated the value of the clearances made on behalf of "the loan licensee. He stated that the conditions set out in Notification No. 305/77-CE dated 5-11-77 have been complied with and the appellants have not exceeded the total production of Rs. 15 lakhs. On the question of time bar, he pointed out that the demand was issued on 10-3-80 for the goods removed during the period 1-4-78 to 12-9-78 and hence it was clearly time barred. He further contended that the assessment in this case cannot be deemed to be provisional since the procedure under Rule 9B of the Central Excise Rules, 1944 was not followed. Even if it is assumed that the total value of clearances could, be known only after the end of the financial year, i.e. 31-3-79. The demand should have been issued from the date of filing of the RT-12 return for March 1979.
In this connection he referred to the case of Asstt. Collector of Central Excise v. T.T. Plunny, Proprietor, Royal Smiths, 1983 ELT 2156 (Kerala) and stated that the limitation should run from the date of clearance in such cases even though the exemption is based on annual turn-over and not from the end of the financial year. In the present case even the assessment of the RT-12 returns for March 1979 had been finalised on 23-4-79.
2. Shri Lakshmi Kumaran, the learned SDR, urged that a manufacturer claiming exemption under Notification 305/77 would not be entitled to do so unless the goods manufactured on account of any other person is also included to determine the value of the goods* According to the SDR, the clarification issued in the Govt. of India, Ministry of Finance, Department of Revenue, F.No. B.23/21/78-TRU dated 23-5-78 to the effect that the value of the goods cleared by a manufacturer on behalf of his loan licensee should not be taken into account for the purpose of determining the eligibility of the manufacturer to the said exemption, has been subsequently modified by a communication dated 14-5-82 which reads as follows :- "(iv) Under Notification Nos. 71/78-CE dated 1-3-78 and No. 80/80-CE dated 19-6-80 (as it existed prior to its amendment by Notification No. 73/81-CE dated 25-3-81), the benefit of the concession is to be given to clearances for home consumption by or on behalf of a manufacturer from one or more factories. Therefore, the clearances by the principal manufacturer (factory owner), even if they are on behalf of a loan licensee will have to be reckoned for the purpose of determining the principal manufacturer (factory owners eligibility to the benefits under these notifications. On the other hand, the clearances made by the principal manufacturer on his own account cannot be clubbed with the clearances made by or on behalf of the loan licensee for the purpose of determining the latter's eligibility to the benefits of these notifications." He, therefore, argued that the appellants would not be entitled to the exemption. On the question of time bar, he urged that the objection would be invalid in as much as the classification list did not contain any reference to the appellants manufacture being on behalf of a loan licensee also, and accordingly the extended period of 5 years should apply for the purpose of limitation.
4. We have carefully considered the contentions raised by both the sides. On the question of time, we find that the show cause notice was actually issued on 10-3-80. The goods were said to have been cleared during 1-4-78 to 12-9-78. The RT-12 return for the month of March 1979 was filed on 2-4-79 and that is the "relevant date" under Section 11 A.The assessment on the RT-12 return was also finalised on 23-4-79. The show cause notice was issued on 10-3-80, clearly beyond the time prescribed under Section 11A of the Central Excises & Salt Act, 1944.
Prima-facie therefore the show cause notice is barred by time. It was alleged on behalf of the department that there was a suppression of facts. The appellants urged that they were manufacturing a portion of the goods on behalf of a loan licensee, M/s. Progressive Industrial Corporation. Of course, this has not been specifically stated in the classification list. But, we find that the RT-12 returns filed by the appellants have been endorsed by the departmental authorities after verifying the details. The learned Consultant for the appellants urges that the Tariff Classification and the rate of duty were unconditionally and finally accepted. It could be found from the RT-12 return that the clearances including the value of clearances on behalf of the loan licensee exceeded the limit of Rs. 15 lakhs. If the department wanted to rely on suppression of materials as a ground claiming an extended period of limitation, the same should have been specifically set out in the show cause notice. In its absence it cannot now be argued at this stage that there was mis-statement or suppression of facts. The demand is therefore clearly time barred.
5. The appellants also claim that they are entitled to the exemption under Notification No. 71/78 for the goods manufactured by them on behalf of the loan licensee to the extent of Rs. 1.29 lakhs and this amount has to be excluded. the learned consultant for the appellants relied on the clarification issued by the Ministry of Finance, Department of Revenue, on 23-5-78. We are of the view that contention of the appellants cannot be accepted. The clarification issued by the Department as explained by the SDR was in respect of medicinal and toilet preparation and has since been modified. However, since the appeal is being disposed of on the ground of time bar, it is not necessary to give any finding on this issue.