1989 (9) TMI 257 - AT - Central Excise

Issues Involved
1. Compliance with Chapter X procedures of the Central Excise Rules, 1944.
2. Requirement of A.R. 3A forms for re-warehousing endorsement.
3. Validity of demands for differential duties.
4. Limitation period for duty demands under Section 11-A of the Central Excises and Salt Act, 1944.

Detailed Analysis

Compliance with Chapter X Procedures
The appellants, M/s. Steel Authority of India Ltd. (SAIL), cleared 'rails' manufactured by them under an exempted rate of duty in terms of various notifications for supply to the Indian Railways. The primary issue was whether the appellants followed the procedure prescribed under Chapter X of the Central Excise Rules, 1944, which was a condition for availing the exempted rate of duty. The appellants contended that they had followed the procedure, including obtaining the necessary C.T. 2 certificates and L-6 licenses, which indicated that the rails were intended for laying tracks. The Tribunal found that the appellants had substantially complied with Chapter X procedures, as evidenced by the C.T. 2 certificates and the L-6 licenses obtained by the Indian Railways.

Requirement of A.R. 3A Forms for Re-Warehousing Endorsement
The department denied the concessional rate of duty on the grounds that the appellants failed to produce A.R. 3A forms containing endorsements regarding the receipt of goods at the destination. The appellants argued that A.R. 3A forms are not statutorily required under Chapter X and that the endorsement only indicates receipt, not usage, of the materials. The Tribunal agreed with the appellants, noting that A.R. 3A forms are not prescribed for Chapter X procedures, which focus on the actual use of the goods. The Tribunal cited previous decisions where substantial compliance with Chapter X was deemed sufficient for availing exemptions, even if A.R. 3A forms were not used.

Validity of Demands for Differential Duties
The department issued demands for differential duties, arguing that the appellants did not comply with the procedure for re-warehousing endorsements. The Tribunal found that the appellants had provided a certificate from the railways stating that the rails were used for track purposes. The Tribunal held that there was no evidence of short accounting or misuse of the materials and that the appellants had substantially complied with the required procedures. The Tribunal remanded the case to the Assistant Collector for verification of the actual utilization of the materials based on departmental records.

Limitation Period for Duty Demands
The appellants argued that most of the demands were barred by the limitation period under Section 11-A of the Central Excises and Salt Act, 1944. The department, however, contended that demands under Rule 196 are not subject to this limitation. The Tribunal did not make a definitive ruling on this issue, leaving it open for determination upon remand. The Assistant Collector was instructed to consider any evidence the appellants might present and to hear them before re-determining the issue of duty demands.

Conclusion
The Tribunal set aside the impugned order and remanded the cases to the Assistant Collector of Central Excise, Bhilai, for verification of the actual utilization of the track materials and the validity of the certificate produced by the appellants. The appeals were disposed of by remand, and the cross-objection filed by the department was dismissed as not maintainable.

← Previous Next →