1. M/s. S.P. Kumria & Sons, Lucknow have filed an appeal against the Order-in-Original Norn. P (13/82) 19 of 1983, dated 22-7-83, passed by the Additional Collector of Central Excise, Allahabad. The appellants have been manufacturing "Steel Hinges in different sizes' since November, 1959. They have been exporting part of their products to their customers in Nepal. The total value of such clearances during the period 26-9-1979 to 19-3-81 amounted to Rs. 1,84,272.98 paise. The appellants have urged that they are small scale unit. Since the goods manufactured by them fall under T.I. 68 of the Central Excise Tariff, their goods were exempted from payment of Central Excise duty under Notifications No. 89/79-C.E., dated 1-3-79 and 105/80-C.E., dated 16-9-1980. They were also exempted from the licensing control under Notification No. 111/78-C.E., dated 9-5-78, as amended by Notification No. 2/81-C.E., dated 17-1-1981. They stated that they had filed necessary declarations and their total clearances never exceeded 80% of the exemption limit under the aforesaid notification. The appellants have admitted that the goods were sold to the parties in Nepal, who paid the Customs duty to Nepalese authorities, they were, however, delivering the goods to them at the Indian side of the border but later the said goods were being imported by the Nepalese into Nepalese side.
2. The Additional Collector of Central Excise, held that the appellants had manufactured these goods for export to Nepal during the period 1979-1982 without obtaining the Central Excise licence and without payment of Central Excise duty, they had thus acted in contravention of Section 6 of the Central Excises and Salt Act, 1944 and the relevant rules made thereunder. He, therefore, demanded the Central Excise duty of Rs. 18,427.30 and imposed penalty of Rs. 1,000.
3. In their appeal to the Tribunal, Shri D.N. Kohli, Consultant for the appellants has contended that the goods were exempted under the aforesaid notification since they were delivered to the purchaser in India though were later exported to Nepal. After some arguments, Shri Kohli withdrew his argument that the goods had been cleared for home consumption under the aforesaid notifications. He, however, based his case on the question of time-bar. He argued that the demand for duty was time barred and penalty was not justified in the circumstances of the case. Necessary declarations under the above Excise Notification have been filed before the Central Excise authorities. The said goods were also duly entered into the relevant sales register, which were examined by the concerned Excise authorities, and there was no allegation of surruptitions or clandestine removal of the goods or suppression of facts in the show cause notice issued to the appellants.
Shri Kohli cited the following cases in support of his contention that in the circumstances of the case the extended period of 5 years could not be applied and the demand of duty should be considered as time barred : (i) Rabindra Steel Ltd., Nagpur v. Collector of Central Excise, Nagpur, 1983 ECR 295-D;Collector of Central Excise, Bombay-II v. Indo Phamaceuticals Works,Ganga Spinning and Weaving Mills v. Collector of Central Excise, Chandigarh, 4. He further submitted that the appellants have not derived any benefit whatsoever by way of evasion of the Central Excise duty. No doubt, the prescribed procedure under Rule 12 for Export to Nepal vide Ministry of Finance (Department of Revenue and Insurance) F. No.297/3/73-CX. 9, dated 29-3-1974 and M.F. (DRI)'s F. No. 297/3/73-CX. 9, dated 24-9-74 had not been followed by the appellants. However, the Customs duties leviable by the Nepalese Government have been paid by the Nepalese Customers and in case the goods were to be exported by the appellants these goods would have been exempted and central excise duty of equal amount would have been paid by the appellants which ultimately would have been adjusted to the credit of the Nepalese Government.
There was, therefore, no mala fide on the part of the appellants.
5. Shri V. Lakshmikumaran, S.D.R. argued that the case against the party on merits was strong and the appellants were not eligible for exemption from payment of Central Excise duty or licensing control under the relevant Notification. The goods in question had been admittedly cleared for export to Nepal and not for home consumption.
Purchase orders were placed on the appellants by the Nepalese parties and payment for the goods were received by the appellants from Nepal the goods were therefore, cleared liable to payment of Central Excise duty. However, on question of time-bar, he had no comments to make except to state that the appellants had not derived any financial benefit out of these transactions.
6. We do not consider it necessary to go into the merits of the case because the present appeal is on the short ground of limitation. The show cause notice did not allege any mis-statement or suppression of facts on the part of the appellants. The extended period of 5 years limitation would not, therefore, be applicable to the present case. We hold that the demand of duty made from the appellants is barred by limitation.
7. As for penalty, on the facts and circumstances of the case, we do not think that there was any intention on the part of the appellants to evade payment of Central Excise duty, the imposition of penalty is, therefore, not justified and is hereby set aside. The appeal is, therefore, allowed.