1997 (11) TMI 161 - AT - Central Excise

Summary

Issues Involved:
1. Eligibility for exemption under Notification No. 75/86.
2. Interpretation of exemption notifications.
3. Applicability of the limitation period under Section 11A.

Issue-Wise Detailed Analysis:

1. Eligibility for Exemption under Notification No. 75/86:

The appellants, engaged in manufacturing motor vehicles and diesel-operated IC engines, were issued a Show Cause Notice (SCN) alleging incorrect availing of exemption under Notification No. 217/85 as amended by Notification No. 79/86. The Department contended that the appellants used component parts (e.g., pistons, piston rings, engine valves) for stationary IC engines, which are not covered under Notification No. 75/86. The Additional Collector upheld this view, stating that Notification No. 75/86 only applied to parts and accessories of motor vehicles, tractors, and trailers, and not to stationary IC engines. Consequently, the duty demand of Rs. 27,887.24 and a penalty of Rs. 25,000/- were confirmed.

2. Interpretation of Exemption Notifications:

The appellants argued that Notification No. 75/86 did not expressly exclude stationary IC engines from its purview. They maintained that as long as the parts were used in manufacturing IC engines classifiable under Chapter 84, the exemption should apply. The Department, however, countered that the notification's opening part limited the exemption to parts and accessories of motor vehicles, tractors, and trailers, implying mobility. The Tribunal agreed with the Department, emphasizing that the notification's proviso should carve out exceptions from the main provision and not add to it. Therefore, stationary IC engines were not considered covered by the exemption.

3. Applicability of the Limitation Period under Section 11A:

The appellants contended that the demand was time-barred, as the Department was aware of the facts since 1982. The Department argued that the SCN invoked Rule 196, which deals with duty remission and falls under Chapter X of the Central Excise Rules, 1944. The Tribunal agreed with the Department, noting that Rule 196 does not necessitate referring to the extended period grounds under Section 11A(1). Hence, the demand was not time-barred.

Conclusion:

The Tribunal upheld the impugned order, rejecting the appeal. It concluded that stationary IC engines do not qualify for exemption under Notification No. 75/86, and the demand raised under Rule 196 was valid and not time-barred.