1. This is an appeal against Order-in-Original No. 30/T.I.15-A/84, dated 27/28-12-1984, passed by the Additional Collector of Central Excise, Indore.
Shri Y.N. Chopra, Consultant, appears on behalf of the appellants and Shrimati V. Zutshi, SDR, on behalf of the Respondent.
2. Appellants have stated that on 12th October, 1982, a show cause notice was issued to them by the Assistant Collector of Central Excise, Bhopal, in which it was alleged that during the period from 15th November, 1979 to 27th July, 1981, the appellants have availed of proforma credit amounting to Rs. 77,881.16 of the countervailing duty paid on goods imported by them, which were classifiable under Item No.68, which was not admissible, and they had thus removed finished excisable goods without payment of equivalent amount of duty in contravention of various Central Excise provisions. Similarly, they also availed of proforma credit in respect of countervailing duty amounting to Rs. 12,816.64 on a consignment of Desmophen, received by the appellants on 20th October, 1981, which again was classifiable under Tariff Item 68, although provisionally classified under Central Excise Tariff Item 15-A. In respect of this lot, it was alleged that the appellants did not file any intimation in form D-3 and they cleared the finished products without paying an equivalent amount of duty, once again, contravening various provisions of Central Excise Rules. It was alleged that the appellants were guilty of sup pression of facts as they had not given full description of the goods nor given full particulars by submitting D-3 declaration nor in RG 23 record. They were, therefore, asked to show cause as to why duty short paid, as indicated above, should not be recovered from them and why a penalty should not be imposed on them for violation of the relevant Central Excise Rules. Appellants state that the proceedings initiated by the Department, by the issue of the show cause notice, are wholly untenable. They were accorded permission to avail of proforma credit under Rule 56A of the Central Excise Rules, 1944 by the Assistant Collector, Central Excise, Bhopal, on 13th February, 1978. This permission did not limit the availment of the proforma credit to duty paid under specific Central Excise Tariff Items, Therefore, it was interpreted by them that they were authorised to avail of proforma credit of countervailing duty paid in respect of all their inputs, namely Polyethers, Desmophen and Silicon. Proforma credit was always availed after due scrutiny by the Inspector of Central Excise over a long period of three years when RT 12 Returns were being regularly submitted every month, duly showing the availment of proforma credit.
The appellants state that on 29th/30th September, 1981, the Excise authorities informed that Desmophen was classifiable under Tariff Item 15A. However, on 20th August, 1982, they communicated that this item would be classifiable under Tariff Item 68. Thus, the Excise authorities themselves were wholly confused on the issue.
3. It has been pointed out by the appellants that the entire demand of duty is barred by time. The show cause notice, demanding duty, was issued on 12th October, 1982, and the period to which the demand relates is from 15th November, 1979 to 27th July, 1981. Since the demand for duty was issued after the statutory period of six months, it is time-barred and illegal. There is nothing in the show cause notice, invoking the extended time limit under the relevant provisions of the law, on the basis of specific charges of fraud, collusion or wilful mis-statement or suppression of facts. The availment of the proforma credit was with the full knowledge and approval of the department.
Proper entries were made in the RG 23 Registers and RT 12 Returns were submitted regularly, showing the proforma credits availed of.
Therefore, the extended period of five years cannot be invoked in support of the duty demanded, which, it is pleaded, should be set aside. The appellants have cited the following case law in support of this legal position :- 4. As regards the lapse of not submitting D-3, it is pointed out that the failure to do so, in any case, has to be viewed in the background of the facts that all the other prescribed procedure was fully followed by the appellants. As long as the procedure is followed in substance, the benefit of availment of credit cannot be denied merely on account of some lapses relating to technicalities. In support of this stand, the appellants have cited the following case law :- 5. In view of the above facts, the appellants have pleaded that the imposition of penalty of Rs. 5,0007- on them is not supportable in law and should be set aside.
6. On behalf of the department, the view taken in the Order-in-Original has been re-iterated. It is stated that the appellants has not requested for availing of proforma credit of goods falling under Tariff Item 68. Since the goods imported by the appellants were classifiable under Tariff Item 68, they were not entitled to availing of proforma credit in respect of countervailing duty paid thereon. It is also stated that insofar as the taking of credit in respect of Rs. 12,816.64 was concerned, this had been done without submission of D-3.
7. We have carefully considered the submissions made before us by both sides and the facts and evidence on record. Duty, amounting to Rs. 77,881.16, has been demanded for the period from 15th November, 1979 to 27th July, 1981. Again, duty has also been demanded to the extent of Rs. 12,816.64 in respect of a consignment of Desmophen received on 20th October, 1981. The show cause notice is dated 12th October, 1982. The entire period for which duty has been demanded is well beyond the normal time limit of six months. The show cause notice does not invoke the relevant provisions of the Excise Law for invoking the extended time limit. Nor does it attempt to justify actually doing so, on the basis of any allegations of fraud or collusion or any wilful mis-statement or suppression of facts. Even the Order-in-Original does not attempt any justification for invoking the extended time limit under the relevant provisions of the Excise Law. It seems to us that no such allegation has been made by the department because, in view of the facts of the case, such allegations would have been unsustainable.
Appellants have all along acted in accordance with the advice and approval of the department. They have also, by and large, fully complied with the Excise procedures for the availment of proforma credit. The department has alleged that the appellants did not furnish full particulars of the raw materials imported. This charge, on the face of it, is not substantiated in view of the fact that the particulars of the goods imported were duly declared and the fact of availment of proforma credit was also duly noted in the classification list, approved by the department.
8. We also, observe that the Additional Collector has imposed a penalty of Rs. 5.000/-. In view of the facts, recounted here, it is not understood as to what were the facts of omission or commission on the part of the appellants, which justify the imposition of this penalty.
9. In view of our above findings, we set aside the Order of the Additional Collector of Central Excise, Indore, and allow the appeal.