1988 (5) TMI 121 - AT - Central Excise

Summary

Issues Involved: Determination of time-barred demand under Section 11A of the Central Excises and Salt Act, 1944 and inclusion of value of bought out items for calculating total clearances under Notification No. 105/80-C.E., dated 19-6-1980.

Time-Barred Demand Issue:
The Revenue appealed against the Collector (Appeals) decision regarding a demand of Rs. 44,062.80 for the period from November, 1980 to March, 1981, arguing that the demand was not entirely time-barred under Section 11A. The Collector (Appeals) found that except for seven to eight days in March 1981, the demand was time-barred. The Revenue contended that the limitation period should commence from the last date of the year based on annual turnover under the exemption Notification. However, the Tribunal upheld the Collector (Appeals) decision, citing a Division Bench ruling that the limitation runs from the date of clearances, not the end of the assessment year.

Inclusion of Bought Out Items Issue:
The dispute also revolved around whether the value of bought out items should be considered in determining total clearances under Notification No. 105/80-C.E., dated 19-6-1980. The Revenue argued that these items, essential for manufacturing textile machinery, should be included as they are components of the final product sold by the respondents. The Tribunal agreed with the Revenue, emphasizing that even if the items were supplied in knock-down condition, they were integral to the manufacturing process. Citing precedents, the Tribunal held that the full intrinsic value of goods, including raw materials, must be accounted for in calculating the turnover ceiling limit. Therefore, the value of bought out items cleared by the respondents was deemed includible for determining total clearances under the said Notification.

Conclusion:
The Tribunal set aside the Collector (Appeals) decision on the inclusion of bought out items but upheld the finding that the demand in question was time-barred under Rule 11A of the Central Excises and Salt Act, 1944, except for seven to eight days in March 1981. Consequently, the appeal was allowed, modifying the Collector (Appeals) order accordingly.