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1986 (7) TMI 274
Issues:
- Confiscation of Indian currency under Sec. 121 of the Customs Act, 1962
- Claim of ownership over the seized currency by the appellants
- Validity of the confiscation order and rejection of appellant's claim
Analysis:
The judgment pertains to the confiscation of Indian currency amounting to Rs. 1 lakh under Sec. 121 of the Customs Act, 1962. The case involves Central Excise Officers visiting the appellants' business premises and seizing gold bars and currency. The appellants disowned both the gold and currency at the time of seizure. The appellants later claimed ownership of the currency, arguing that it did not represent the sale proceeds of contraband goods. The appellants contended that the seizure was unlawful as there was no evidence linking the currency to illicit activities. They further claimed that the statements disowning the currency were not voluntary. On the other hand, the Departmental Representative argued that the appellants' delayed claim and prior disowning of the currency should disentitle them from ownership. The Representative highlighted circumstances supporting the reasonable belief behind the seizure, including the concealment of currency and recovery of gold from unauthorized premises.
The primary issue addressed by the tribunal was whether the appellants had a legal right to claim ownership of the seized currency. The tribunal examined the statements made by the appellants at the time of seizure, where they disowned the currency. Despite subsequent claims, the tribunal found the earlier statements to be true and voluntary. The tribunal noted the appellants' failure to make any claim to the currency in various communications and legal proceedings following the seizure. The tribunal concluded that the appellants' conduct, combined with their initial disowning of the currency, indicated they had no legal title or right to claim ownership. Therefore, the tribunal upheld the confiscation order and rejected the appeals, stating that the appellants were not entitled to the currency under the law.
In the judgment, the tribunal emphasized the importance of the appellants' initial statements disowning the currency, which were considered true and voluntary. The tribunal scrutinized the appellants' conduct post-seizure, highlighting their failure to assert any ownership claim over the currency in subsequent communications and legal proceedings. The tribunal found that the appellants' belated claim, made in response to the show cause notice, was legally untenable given their earlier disavowal of the currency. Ultimately, the tribunal held that the appellants had no legal title to the seized currency, leading to the dismissal of the appeals. The tribunal's decision was based on the appellants' consistent disavowal of the currency and their failure to establish a legal right to claim ownership.
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1986 (7) TMI 273
Issues Involved:
1. Misdeclaration and suppression of facts by the appellant.
2. Eligibility for concessional duty under Heading No. 84.66 of the Customs Tariff Act, 1975.
3. Liability to confiscation under Section 111(m) and (o) of the Customs Act, 1962.
4. Penalty under Section 112 of the Customs Act, 1962.
5. Jurisdiction and propriety of the show cause notices and subsequent adjudication.
6. Applicability of the larger period of limitation under the proviso to Section 28(1) of the Customs Act, 1962.
Detailed Analysis:
1. Misdeclaration and Suppression of Facts by the Appellant
The appellant was accused of misdeclaration in the application for registration of the machinery as a "Project Import" and in the Bill of Entry dated 12-11-1979. Specifically, it was alleged that the appellant failed to install the machinery in their premises or use it for the substantial expansion of their factory, contrary to their declared intent. The Collector found that the appellant had no intention to use the imported goods for the substantial expansion of their existing unit, as evidenced by an agreement dated 31-7-1979 for the sale and transfer of all assets to another company. This misdeclaration was admitted during the proceedings and was never controverted.
2. Eligibility for Concessional Duty Under Heading No. 84.66 of the Customs Tariff Act, 1975
The machinery was cleared at a concessional rate under Heading No. 84.66 based on the appellant's declaration that it was meant for substantial expansion. However, the Collector concluded that the appellant had no intention to use the machinery for this purpose, as evidenced by the agreement for sale executed before the application for concessional duty. The Collector held that the appellant's declaration was incorrect and the machinery was not entitled to concessional duty.
3. Liability to Confiscation Under Section 111(m) and (o) of the Customs Act, 1962
The machinery was found liable to confiscation under Section 111(m) and (o) due to the misdeclaration and failure to adhere to the conditions of the import license. The machinery was never installed in the appellant's premises and was transferred to another company, violating the conditions of the license. The Collector held that the goods were liable for confiscation, but since they were not available, a penalty was imposed instead.
4. Penalty Under Section 112 of the Customs Act, 1962
Given the liability to confiscation, the Collector imposed a penalty of Rs. 50,000 under Section 112 of the Customs Act. The Tribunal upheld this penalty, noting that the appellant had deliberately suppressed facts and made misstatements to evade duty.
5. Jurisdiction and Propriety of the Show Cause Notices and Subsequent Adjudication
The appellant contended that the show cause notices were issued without jurisdiction and that the Customs authorities had no right to inquire into subsequent changes in ownership. The Tribunal rejected these contentions, stating that the Customs authorities have jurisdiction to adjudicate on matters related to the conditions of import and subsequent breaches thereof. The Tribunal also noted that the performance of conditions could only be verified after clearance and that subsequent breaches were relevant to the adjudication process.
6. Applicability of the Larger Period of Limitation Under the Proviso to Section 28(1) of the Customs Act, 1962
The Tribunal upheld the invocation of the larger period of limitation under the proviso to Section 28(1), noting that the appellant had suppressed the intended transfer and misdeclared the purpose of the import. The short levy of duty was a direct result of these actions, justifying the extended period for recovery.
Conclusion
The Tribunal found no merit in the appellant's contentions and upheld the order of the Collector. The appeal was dismissed, affirming the reassessment of duty, the liability to confiscation, and the imposition of a penalty.
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1986 (7) TMI 265
Issues Involved:
1. Confiscation of excess gold ornaments.
2. Imposition of personal penalty under Section 74 of the Gold Control Act.
3. Interpretation of Section 55 of the Gold Control Act.
4. Validity of the Collector of Customs (Appeals) decision.
5. Appropriateness of the penalty amount.
Detailed Analysis:
1. Confiscation of Excess Gold Ornaments:
The initial search of the appellants' business premises on 16.9.1982 revealed four pieces of new gold ornaments weighing 134.550 grams in excess of the recorded stock. The Adjudicating Authority concluded that the appellants had contravened Section 55 of the Gold Control Act by not accounting for the gold in their stock register immediately upon receipt. The Collector of Customs (Appeals) set aside the order of confiscation, indicating that the imposition of a penalty was not authorized by Section 74 of the Gold Control Act. However, the Tribunal noted that the gold ornaments were liable to confiscation under Section 71 of the Gold Control Act, as the appellants had failed to maintain proper records.
2. Imposition of Personal Penalty under Section 74 of the Gold Control Act:
The Adjudicating Authority imposed a personal penalty of Rs. 5000/- on the appellants under Section 74 of the Gold Control Act. The Collector of Customs (Appeals) overturned this decision, arguing that the penalty was incongruous since the gold was not proven to be liable for confiscation. The Tribunal disagreed, stating that Section 74 provides for a penalty if any act or omission renders the gold liable to confiscation. The Tribunal reinstated the penalty but reduced the amount.
3. Interpretation of Section 55 of the Gold Control Act:
The Tribunal referenced the case of L. Kashi Nath v. The Collector, Central Excise, Allahabad, which clarified that the term "as and when" in Section 55 implies contemporaneous action. The legislative intent is for licensed dealers to make entries in the registers immediately upon buying or acquiring gold. Failure to do so contravenes Section 55, as timely record-keeping is essential for regulatory checks.
4. Validity of the Collector of Customs (Appeals) Decision:
The Tribunal found that the Collector of Customs (Appeals) erred in setting aside the Adjudicating Authority's order. The Tribunal emphasized that the omission to make contemporaneous entries in the stock register constituted a violation of Section 55, justifying the imposition of a penalty under Section 74. The Tribunal noted that the Collector of Customs (Appeals) misinterpreted the provisions and the legislative intent of the Gold Control Act.
5. Appropriateness of the Penalty Amount:
The Tribunal acknowledged the respondent's contention that the penalty of Rs. 5000/- was excessive. Citing previous decisions, the Tribunal concluded that a reduced penalty would suffice to ensure compliance and vigilance in the future. Consequently, the penalty was reduced from Rs. 5000/- to Rs. 1000/-.
Conclusion:
The Tribunal allowed the appeal, setting aside the Order-in-Appeal passed by the Collector of Customs (Appeals), New Delhi. The Order-in-Original by the Additional Collector of Customs and Central Excise, Chandigarh, was restored with a reduced penalty of Rs. 1000/-.
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1986 (7) TMI 262
Issues:
1. Interpretation of whether the armature supplied by M/s. Raka Electricals to the Railways qualifies as a rotor.
2. Determination of duty liability between M/s. Raka Electricals and Shyama Electricals.
3. Analysis of the exemption under Government of India notification No. 28/60-CE for parts of electrical motors.
Analysis:
1. The primary issue in this case revolves around whether the armature supplied by M/s. Raka Electricals can be classified as a rotor. The defense argued that armatures and rotors are distinct components, with armatures being current-carrying windings in direct current motors, while rotors are components in alternating current motors. The legal counsel emphasized this distinction to counter the department's classification of the armatures as rotors.
2. The case also delves into the duty liability concerning the supply of armatures to the Railways. The central excise officers issued a demand for duty payment on armatures supplied by M/s. Raka Electricals, which were allegedly purchased from Shyama Electricals. The defense contended that Shyama Electricals existed during the relevant period and manufactured the armatures, shifting the duty liability to them. However, the ambiguity surrounding the existence of Shyama Electricals and their involvement in manufacturing raises doubts.
3. Furthermore, the interpretation of the exemption under Government notification No. 28/60-CE for parts of electrical motors is crucial. The legal arguments focused on whether the armatures supplied qualified for this exemption, given the specific definitions and components outlined in the notification. The defense's reliance on the exemption and the distinction between armatures and rotors played a significant role in the case.
In conclusion, the appellate tribunal rejected the appeal, upholding the orders of the Central Board of Excise and Customs. The decision was based on the determination that the armatures supplied by M/s. Raka Electricals could not be considered exempt under the notification due to their classification as rotors. The doubts surrounding the involvement of Shyama Electricals in manufacturing and the lack of clarity in explanations further supported the rejection of the appeal. The judgment underscores the importance of precise classification and understanding of components in the context of duty liabilities and exemptions under relevant notifications.
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1986 (7) TMI 261
Issues Involved:
1. Eligibility for 'Project Import' benefits under T.I. 84.66.
2. Compliance with the conditions for concessional assessment under Notification No. 183-Custom.
3. The timing and procedural requirements for registration of the import contract.
4. The validity of the refund claim for duty paid on 12 Air Jet Looms.
Detailed Analysis:
1. Eligibility for 'Project Import' benefits under T.I. 84.66:
The respondents imported 24 Air Jet Looms, with the first 12 cleared on 31.3.1983, and later sought 'Project Import' benefits under T.I. 84.66. The Collector of Customs (Appeals) allowed the benefit, assuming the contract was registered before importation. However, the Tribunal found that the contract was registered only on 18.4.1983, after the clearance of the first 12 looms, thus disqualifying them from the 'Project Import' benefits for those looms under the specific terms of T.I. 84.66.
2. Compliance with the conditions for concessional assessment under Notification No. 183-Custom:
The Assistant Collector rejected the refund claim because the respondents did not fulfill the conditions stipulated in Notification No. 183-Custom, which requires:
- Goods imported as per a registered contract.
- Import against a specific contract.
- Contract registered in the prescribed manner.
- Registration before the clearance of goods.
The Tribunal upheld this decision, emphasizing that the statutory conditions are mandatory and not subject to waiver.
3. The timing and procedural requirements for registration of the import contract:
The respondents argued that delays in obtaining the Textile Commissioner's recommendation prevented timely registration. They cited prior practices and judgments to support their case. However, the Tribunal noted that the statutory requirement under T.I. 84.66 mandates registration before clearance, which was not done. The Tribunal found no evidence of an application for registration before 31.3.1983 and highlighted that the importers did not indicate any intention to claim 'Project Import' benefits at the time of clearance.
4. The validity of the refund claim for duty paid on 12 Air Jet Looms:
The refund claim filed on 27.4.1983 was based on the premise that the contract registration should apply retrospectively. The Tribunal rejected this, stating that the statutory provisions of T.I. 84.66 do not allow for retrospective registration. The Tribunal also criticized the Collector (Appeals) for erroneous assumptions and lack of application of mind, ultimately restoring the Assistant Collector's order rejecting the refund claim.
Conclusion:
The Tribunal concluded that the respondents did not comply with the mandatory conditions for 'Project Import' benefits under T.I. 84.66, as the contract was not registered before the clearance of the goods. The refund claim was, therefore, invalid, and the order of the Collector (Appeals) was set aside, restoring the Assistant Collector's decision.
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1986 (7) TMI 260
Issues Involved:
1. Classification of hand-knitting acrylic yarn.
2. Validity of the show cause notice.
3. Applicability of Notification No. 27/75.
4. Interpretation of Explanation I(iv) under Tariff Item 18.
5. Time limitation for the demand of duty.
6. Imposition of penalty.
7. Applicability of Rule 9A(5) of Central Excise Rules, 1944.
Detailed Analysis:
1. Classification of Hand-Knitting Acrylic Yarn:
The appellants, manufacturers of hand-knitting acrylic yarn, argued that their grey yarn was assessed under Notification No. 27/75 and no further duty was payable after processing. They contended that dyeing does not constitute bulking or texturizing. The Tribunal concluded that the yarn subjected to steaming and dyeing acquires characteristics of bulked yarn, thus falling under the definition of bulked yarn as per the Central Excise Tariff.
2. Validity of the Show Cause Notice:
The appellants argued that the show cause notice was vague and that the onus of proving the yarn as bulked was on the Department. The Tribunal noted that the Department did not seek the Chief Chemist's advice but relied on the Silk and Art Silk Manufacturers Research Association's certificate, which indicated that the yarn did not have characteristics of bulked yarn.
3. Applicability of Notification No. 27/75:
The appellants claimed that acrylic hand-knitting yarn was specifically classified under Central Excise Tariff Item 18(i) in Notification No. 27/75. The Tribunal rejected this interpretation, stating that the notification covers yarn spun out of synthetic staple fiber but does not include bulked yarn.
4. Interpretation of Explanation I(iv) under Tariff Item 18:
A critical issue was whether the words "but does not include bulked yarn and stretch yarn" in Explanation I(iv) applied only to products mentioned in Explanation I(iv) or also to those in Explanation I(ii) and (iii). The Tribunal concluded that these words apply to all yarn other than textured yarn falling under tariff item 18(i), aligning with the pattern of Explanation II.
5. Time Limitation for the Demand of Duty:
The appellants raised the issue of time bar, arguing that the demand extended beyond one year. The Tribunal noted that the Appellate Collector had already restricted the demand to one year prior to the show cause notice date. The Tribunal upheld this decision, stating that the claim of goods being cleared in accordance with due procedure does not affect the Department's right to demand differential duty later.
6. Imposition of Penalty:
In the case of Modella, a penalty of Rs. 2000/- was imposed. The appellants argued that the Collector acknowledged their bona fides, making the penalty unsupportable. The Tribunal found that the appellants had not filed a classification list for dyed yarn, justifying the penalty imposed by the Collector.
7. Applicability of Rule 9A(5) of Central Excise Rules, 1944:
The appellants argued that under Rule 9A(5), duty should be payable as per the rate in force on the date of payment, and since the old tariff no longer exists, no duty would be payable. The Tribunal noted that Rule 9A(5) had been amended to state that duty is payable as per the rate in force on the date of the demand notice or payment, whichever is earlier. The Tribunal also observed that when the dates of actual removal of goods are ascertainable, Rule 9A(1)(ii) applies, making duty payable as per the rate on the date of removal.
Conclusion:
The Tribunal dismissed both appeals, upholding the classification of the yarn as bulked yarn, the validity of the show cause notice, the applicability of Notification No. 27/75, the interpretation of Explanation I(iv), the time limitation for the demand of duty, the imposition of penalty, and the applicability of Rule 9A(5) as amended.
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1986 (7) TMI 259
Issues:
Application under Section 130(1) of the Customs Act to refer points arising out of an appeal order. Interpretation of law regarding the burden of proof in establishing seized goods as smuggled. Scope of concurrent findings of facts in second appeal before the Tribunal.
Analysis:
The application before the Appellate Tribunal CEGAT, Bombay, under Section 130(1) of the Customs Act sought to refer points arising from an appeal order. The Collector of Customs required the Tribunal to refer specific points outlined in Annexure 'B' related to an appeal order. During the hearing, it was noted that the Department had relied on the decision of the Supreme Court in a similar case to argue that the initial burden of proof had been met through circumstantial evidence. The contention was whether the Tribunal could disturb concurrent findings of fact without evidence of perversity or contradiction.
The Respondent argued that only questions of law, not facts, could be referred to the High Court and that the questions should arise directly from the Tribunal's order. It was emphasized that questions of law must be linked to the order served on the Collector. The Tribunal clarified that questions of law for reference should directly stem from the order under consideration, not any arbitrary legal question.
Regarding the interpretation of law on the burden of proof in establishing seized goods as smuggled, it was observed that the seized goods were not subject to specific Customs Act provisions. The Department had to establish the goods were smuggled, but the authorities' conclusions were challenged as based on presumptions and not considering explanations or subsequent statements. The Tribunal found the authorities' approach flawed, especially in assuming the goods were not freely available in the market, which was incorrect during the relevant period.
In discussing the scope of concurrent findings of facts in a second appeal, the Tribunal highlighted that unlike civil procedure, the Customs Act did not restrict appeals to questions of law only. While acknowledging the importance of not disturbing concurrent findings lightly, the Tribunal asserted its authority to intervene if findings were based on improper considerations, ignored crucial evidence, or misapplied the law. The Tribunal emphasized that it could not overturn findings solely because a different view was possible, but it had the power to intervene if necessary.
After considering all aspects, the Tribunal found no merit in the application and subsequently rejected it. The judgment highlighted the importance of proper consideration of evidence, adherence to legal standards, and the Tribunal's authority to intervene in findings of fact if justified.
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1986 (7) TMI 258
Issues:
Interpretation of Rule 9A (i)(ii) and Rule 9A(5) regarding the determination of excise duty rates and valuation for goods cleared or removed from a factory or warehouse without payment of duty and compliance with excise formalities.
Detailed Analysis:
1. Facts of the Case: The appeal involved a dispute regarding the excise duty leviable on shoe-making machines manufactured by a company during 1975-78. The company had cleared some machines without paying excise duty and without following formalities, leading to a demand for duty and penalty by the authorities.
2. Interpretation of Rule 9A (i)(ii) vs. Rule 9A(5): The main contention was whether Rule 9A (i)(ii) or Rule 9A(5) applied for determining the duty rate. The appellant argued that the term "cleared" should be synonymous with "removed," and thus Rule 9A (i)(ii) should apply based on the date of actual removal. The respondent, however, contended that Rule 9A(5) was applicable, even before the 1981 amendment.
3. Precedents and Authorities: Various decisions and precedents were cited to support both parties' arguments. The appellant relied on cases where Rule 9A (i)(ii) was held applicable when the date of removal was known. Contrarily, the respondent cited cases where Rule 9A(5) was deemed relevant for instances of non-compliance leading to duty demand.
4. Tribunal Decisions: The Tribunal referred to previous judgments where the distinction between "cleared" and "removed" was discussed. It was noted that when actual removal dates were ascertainable, Rule 9A(1)(ii) should apply, as in the present case, rejecting the application of Rule 9A(5).
5. Penalty Imposition: The Tribunal upheld the penalty imposed due to the company's failure to pay duty initially, despite later rectifying the error. The Tribunal considered the company's stature and the reduced penalty amount by the Board, affirming the decision on penalty.
6. Final Decision: The Tribunal modified the Board's order, directing that duty be charged as per Rule 9A(1)(ii) and any excess duty paid should be refunded. The penalty amount was upheld, considering the company's compliance history and the reduced penalty by the Board.
In conclusion, the Tribunal clarified the application of Rule 9A (i)(ii) for determining excise duty rates based on the date of actual removal of goods, rejecting the application of Rule 9A(5) in cases where removal dates were known. The penalty imposition was upheld, and the appeal was disposed of accordingly.
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1986 (7) TMI 257
Issues Involved:
1. Condonation of delay in filing appeals.
2. Determination of "sufficient cause" for delay.
3. Relevance of postal transit time.
4. Application of judicial precedents.
Issue-wise Detailed Analysis:
1. Condonation of Delay in Filing Appeals:
The primary issue revolves around whether the delay in filing five appeals by the Collector of Central Excise, Bhubaneswar, should be condoned. The appeals were dispatched by registered post on 28-11-1985 and received on 4-12-1985, two days after the limitation period expired on 2-12-1985. The applicant argued that the delay was beyond their control and should be condoned due to due diligence shown in dispatching the appeals before the expiry of the limitation period.
2. Determination of "Sufficient Cause" for Delay:
The applicant cited the Supreme Court judgment in *Ramlal and Others v. Rewa Coalfields Ltd.* (AIR 1962 SC 361), emphasizing that the party applying for condonation must show why the appeal was not filed on the last day of the prescribed limitation period. The applicant argued that considerations of bona fides or due diligence were material and relevant. The Tribunal has the power to condone delays if there are good grounds, and in this case, the delay was attributed to postal transit, a factor beyond the applicant's control.
3. Relevance of Postal Transit Time:
The applicant contended that the normal postal transit time from Bhubaneswar to New Delhi was 5 to 6 days, and thus the delay should be excused. However, the respondent argued that the appeals were dispatched too close to the expiry date, showing negligence. The respondent cited the Orissa High Court judgment in *Brajabandhu Nanda v. Commissioner of Income-tax, Bihar & Orissa* [1962 (44) ITR 668], where a delay of one day due to postal transit was not considered sufficient cause for condonation.
4. Application of Judicial Precedents:
The applicant referred to several judgments, including *State of West Bengal v. Administrator, Howrah Municipality and Others* (AIR 1972 SC 749), which advocated for a liberal construction of "sufficient cause" to advance substantial justice. The respondent, on the other hand, relied on the Orissa High Court's decision in *Kella Appalaswamy and Sons v. Commissioner of Income-tax, Orissa* [1977 (106) ITR 487], which held that only unusual postal delay could be a ground for condonation. The Tribunal had to balance these precedents to determine whether the delay in the present case merited condonation.
Decision and Reasoning:
After considering the submissions and precedents, the Tribunal noted that the appeals were dispatched 5 days before the expiry of the limitation period and received 2 days late. The Tribunal emphasized that the Supreme Court in *Ramlal v. Rewa Coalfields Ltd.* had established that the party need not explain the delay during the entire limitation period but only why the appeal was not filed on the last day of the prescribed period. The Tribunal found no negligence, inaction, or lack of bona fides on the part of the applicant, and substantial justice required that the appeals be heard on their merits. Consequently, the Tribunal held that there was sufficient cause to condone the 2-day delay in filing the appeals.
Conclusion:
The Tribunal decided in favor of condoning the delay, emphasizing the importance of advancing substantial justice and the absence of negligence or inaction by the applicant. The applications were returned to the original Bench for passing appropriate orders in conformity with this decision.
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1986 (7) TMI 256
Issues Involved:
1. Classification of the product under Tariff Item 27(e) or 27(f).
2. Applicability of the extended period of limitation for the demand of duty.
Detailed Analysis:
1. Classification of the Product under Tariff Item 27(e) or 27(f):
The appellants are manufacturers of collapsible tubes falling under Item No. 27(e) of the First Schedule to the Central Excises and Salt Act, 1944. They clear plain tubes on payment of duty and then subject the goods to lacquering and/or printing. The appellants argue that printing and lacquering do not form part of the manufacturing process of collapsible tubes and that the tubes, even without these processes, are marketable commodities. They contend that their products should be classified under 27(e) as "Extruded shapes and sections including extruded pipes and tubes."
The Assistant Collector, however, held that the appellants had cleared collapsible tubes after printing and lacquering without filing the price list for the same, thus evading duty by mis-declaring aluminium containers as mere extruded tubes. The lower authorities determined that the products, used for packaging toothpaste, medicines, cosmetics, shaving cream, etc., fall under sub-item 27(f) meant for containers made of aluminium ordinarily intended for packaging goods for sale. The authorities emphasized that the products undergo further processes such as trimming, threading, printing, and lacquering, which transform them from tubes to containers.
The Tribunal upheld this view, stating that the products manufactured by the appellants are actually ready for packing goods for sale and thus cease to be tubes, becoming containers. The Tribunal noted that the further operations carried out by the appellants, including trimming and threading, indicate that the products are containers, not tubes. The Tribunal rejected the reliance on the Gujarat High Court decision, noting that the facts were different and the issue of whether the product is a container was not scrutinized in that case.
2. Applicability of the Extended Period of Limitation for the Demand of Duty:
The appellants received three show cause notices demanding duty for different periods, alleging mis-description of the products. The appellants argued that there was no suppression or wilful mis-statement as they had informed the Department of the nature of their activities, including printing and lacquering. They also argued that the demand was barred by time as per Rule 10 of the Central Excise Rules.
The Tribunal noted that the appellants had indicated in their classification list effective from 28-3-1977 that printing and lacquering would be charged extra, although this was scored out as suggested by the Superintendent. The classification list dated 16-2-1979 also mentioned collapsible tubes. The Tribunal found that the Department was aware of the product and processes involved, and there was no suppression or wilful mis-statement by the appellants. Therefore, the Tribunal held that the demand should be restricted to a period of six months prior to the dates of the respective show cause notices, as the longer period of limitation could not be invoked.
Conclusion:
The Tribunal confirmed the classification of the product under T.I. 27(f) as containers and restricted the demand to six months prior to the dates of the respective show cause notices. The lower authorities were directed to re-work the demand on this basis. The appeal was disposed of accordingly.
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1986 (7) TMI 255
Issues:
Classification of automatic circular stacking and splitting machine under Tariff Heading 84.59(1) or 84.59(2) of CTA 1975.
Analysis:
The appeal filed by the Collector of Customs, Bombay challenges the order-in-appeal passed by the Collector of Customs (Appeals), Bombay regarding the classification of an automatic circular stacking and splitting machine, described as a "Foam cutting machine" by the respondents. The Collector (Appeals) upheld the respondents' claim of assessment under Tariff Heading 84.59(2) of CTA 1975, considering the machine to shape foam into different foam products available in the market. The respondents argued that the machine manufactured marketable commodities like foam mattresses and cushions by cutting foam blocks, making them suitable for sale. The Collector (Appeals) relied on a precedent assessment and allowed the appeal with consequential relief to the respondents.
The appellant contended that the machine only cut and stacked pre-formed blocks of polyurethane foam, not producing foam products independently. The appellant argued that the machine did not create a new commodity as cutting foam blocks did not change the nature of the foam itself. The appellant relied on a previous Tribunal's decision to support the classification under Tariff Heading 84.59(1) for machines with individual functions not specified elsewhere.
The respondent's advocate argued that the registration certificate with the Directorate of Small Scale Industries mentioning polyurethane foam did not preclude the manufacture of other foam products. The advocate highlighted that sub-heading (2) of Tariff Heading 84.59 covered machinery designed for the production of commodities, and the machine in question produced well-known marketable products like foam mattresses and sheets. The advocate emphasized that the purpose or use of the machine was essential for classification, as per the Supreme Court's judgment.
The Tribunal considered the arguments from both sides and analyzed Tariff Heading 84.59, noting that sub-heading (2) was more specific than sub-heading (1). The Tribunal concluded that the machine in question was designed for the production of commodities like foam products, which were marketable goods. The Tribunal dismissed the appellant's reliance on the registration certificate and catalog, emphasizing that the machine's purpose and function determined its classification. Therefore, the Tribunal upheld the classification under Tariff Heading 84.59(2) as decided by the Collector (Appeals) and rejected the appeal.
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1986 (7) TMI 254
Issues Involved:
1. Limitation period for the show cause notice.
2. Applicability of Rule 9 of the Central Excise Rules.
3. Evidence of clandestine removal and surreptitious manufacture.
4. Validity of the show cause notice and the basis of duty demand.
5. Justification for the penalty imposed.
Summary:
1. Limitation Period for the Show Cause Notice:
The appellants argued that the show cause notice issued on 12th May 1975 was incomplete and only finalized with the corrigendum issued on 10th February 1977. They contended that the limitation period should count from the date of the corrigendum, making the demand for the entire period barred. The Department, however, maintained that the first show cause notice was complete and self-contained, with only minor changes in the subsequent notice.
2. Applicability of Rule 9 of the Central Excise Rules:
The appellants questioned the applicability of Rule 9, arguing that it does not apply to manufacturers working under the self-removal procedure governed by Chapter VIIA of the Central Excise Rules, 1944. The Department countered that Rule 9(1) refers to "these Rules," which includes rules under Chapter VIIA.
3. Evidence of Clandestine Removal and Surreptitious Manufacture:
The appellants contended that there was no evidence of clandestine removal and that the case rested on surmises and conjectures. They cited the Supreme Court decision in the case of Oudh Sugar Mills v. Union of India, which held that average production cannot be the basis for issuing a show cause notice. The Department argued that it is not required to prove with mathematical precision the extent of clandestine manufacture and removal, and once evidence of non-accountal is shown, the onus shifts to the manufacturer.
4. Validity of the Show Cause Notice and the Basis of Duty Demand:
The show cause notice alleged short accountal of kraft paper and demanded duty on the presumed quantity of corrugated board manufactured therefrom. The Assistant Collector allowed various deductions for moisture content, reel core weight, packing material, and losses due to poor quality paper. However, the appellants argued that the notice did not allege clandestine manufacture or removal, nor did it provide a basis for the conclusion that short-accounted kraft paper was necessarily manufactured into corrugated board and removed without payment of duty.
5. Justification for the Penalty Imposed:
The appellants argued that no mens rea was established, and the show cause notice did not envisage or give notice regarding the imposition of penalty. The Department maintained that the burden of proof shifted to the appellants once the Department provided evidence of non-accountal.
Judgment:
The Tribunal found that there was no evidence of clandestine manufacture or surreptitious removal of excisable goods. The show cause notice and subsequent communications did not provide a basis for the conclusion that short-accounted kraft paper was manufactured into corrugated board and removed without payment of duty. The Tribunal also noted discrepancies in the figures of goods short-accounted for and the goods on which duty was demanded. The Assistant Collector's deductions for various factors virtually met the total quantity of goods alleged to have been short-accounted for. The Tribunal concluded that the demand for duty and the imposition of penalty were based on unwarranted assumptions and not supported by tangible evidence. Accordingly, the orders of the lower authorities, including the demand for duty and the imposition of penalty, were set aside, and the appeal was allowed.
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1986 (7) TMI 253
Issues Involved:
1. Interpretation of Condition No. 13 of OGL No. 4.
2. Validity of the Collector's order regarding the import of copra.
3. Request for a detention certificate for wharf rent exemption.
Issue-Wise Detailed Analysis:
1. Interpretation of Condition No. 13 of OGL No. 4:
The primary issue in this case revolves around the interpretation of Condition No. 13 of OGL No. 4. The condition stipulates that the OGL is "without prejudice to the application to any goods of any other prohibition or regulation affecting the import that may be in force at the time when such goods are imported." The Collector interpreted this to mean that since the import of copra was canalized through the State Trading Corporation (STC) during the policy period 1980-81, the importer's claim for clearance under OGL No. 4 was invalid. The appellant argued that the prohibition referred to under Condition No. 13 should be interpreted to mean prohibitions under other laws outside the Imports and Exports (Control) Act, 1947, and not those within it. However, the Tribunal found that the OGL No. 4 is a specific provision under the Imports and Export (Control) Act, 1947, and that the prohibition in Condition No. 13 includes prohibitions under the same Act. The Tribunal concluded that the condition ensures that while trade is facilitated for importing replacement goods, the imports do not defeat the policy relevant at the time of import.
2. Validity of the Collector's Order:
The Collector had exercised his power under old Section 130 of the Customs Act to review the Assistant Collector's order, which allowed the clearance of copra under OGL No. 4. The appellant contended that the import was valid under OGL No. 4 and that the Collector's order was incorrect. The respondent argued that the import of copra was canalized and required an ITC license, which was not obtained by the appellant. The Tribunal agreed with the respondent, stating that the import of copra was indeed canalized through the STC under Appendix 9, para No. 5(ii) of the Import Policy for the year 1980-81. Therefore, the import under OGL No. 4 was not permissible, and the Collector's order for confiscating the goods and levying a penalty was correct. The Tribunal confirmed the Collector's order and rejected the appeal.
3. Request for a Detention Certificate:
The appellants requested the issuance of a detention certificate to claim relief from wharf rent charged by the Bombay Port Trust. The Tribunal noted that this aspect did not form part of the Collector's order against which the appeal was made. Additionally, the issuance of the certificate is not decided under the Customs Act, and therefore, the Tribunal does not have jurisdiction to deal with this request. Consequently, the request for a detention certificate was also rejected.
Conclusion:
The Tribunal upheld the Collector's order, confirming the confiscation of the goods and the levy of a penalty. The appeal was rejected on the grounds that the import of copra was canalized and required an ITC license, which was not obtained. The request for a detention certificate was also denied due to lack of jurisdiction.
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1986 (7) TMI 252
Issues:
Appeal against order of confiscation and personal penalty under Customs Act.
Detailed Analysis:
Issue 1: Confiscation of Vehicle
The appeal challenged the order of confiscation of a truck under Sec. 115(l)(c) of the Customs Act. The Addl. Collector ordered confiscation based on the truck not stopping when signaled by Customs Officers. However, Sec. 115(l)(c) allows confiscation of a conveyance that fails to stop under Sec. 106. Sec. 106 empowers officers to stop a vehicle only if there is reason to believe it is involved in smuggling. The Addl. Collector's finding that the vehicle was stopped on suspicion, not belief of smuggling, renders the stopping illegal. Thus, the truck could not be considered liable for confiscation under Sec. 115(l)(c).
Issue 2: Lack of Evidence for Confiscation
The appeal contended that the department failed to establish that the truck was used in smuggling or carriage of smuggled goods, a requirement for confiscation under Sec. 115(l)(c). The Addl. Collector did not allege or find that the truck was involved in smuggling activities. Mere failure to stop the vehicle, without evidence of smuggling, is insufficient for confiscation under Sec. 115(l)(c). Therefore, the Addl. Collector's order of confiscation was deemed illegal and set aside.
Issue 3: Personal Penalty on Owner
The appeal also challenged the personal penalty imposed on the owner under Sec. 117 of the Customs Act. The Addl. Collector imposed the penalty based on the owner's alleged connivance in using the truck for smuggling. However, the order did not specify the provision violated by the owner, rendering the penalty without jurisdiction. As a result, the penalty on the owner was set aside.
Conclusion
The judgment allowed the appeal, setting aside the order of confiscation of the vehicle and the personal penalty imposed on the owner. The truck was to be released to the owner, and any paid penalty was to be refunded. The decision highlighted the necessity of evidence and proper legal grounds for confiscation and penalties under the Customs Act.
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1986 (7) TMI 251
Issues Involved:
1. Classification of Coca Cola and Fanta (Orange) under Central Excise Tariff.
2. Applicability of Section 11B of the Central Excise Act versus Common Law for refund claims.
3. Time limitation for filing refund claims.
4. Doctrine of 'Lis' and its relevance to the date of discovery of the mistake.
Detailed Analysis:
1. Classification of Coca Cola and Fanta (Orange) under Central Excise Tariff:
The appellants manufactured Coca Cola and Fanta (Orange) under a franchise agreement and filed a classification list under Rule 173B of the Central Excise Rules, declaring these beverages under T.I. 1D of the First Schedule with a duty rate of 20% ad valorem. This classification was approved by the Superintendent of Central Excise. In 1976, the tariff description was amended, reducing the duty to 10% for aerated waters under T.I. 1D(2). The appellants continued to classify the beverages under the mistaken impression that they contained blended flavouring concentrate. An order in the case of Sri Krishna Bottlers (P) Ltd. later clarified that Coca Cola and Fanta (Orange) did not contain blended flavouring concentrate and should fall under T.I. 1D(2) with a 10% duty rate.
2. Applicability of Section 11B of the Central Excise Act versus Common Law for refund claims:
The appellants argued that their refund claim was governed by Common Law or General Law, not by the Central Excise Act. They cited several judgments to support the view that there was no limitation for claiming refunds in cases of tax levied without authority of law. The Department, however, contended that Section 11B, which came into existence before the refund claim was filed, imposed a six-month limitation period for such claims.
3. Time limitation for filing refund claims:
The appellants filed their refund claim on July 13, 1983, within three years of discovering the mistake, as per the order in the case of Sri Krishna Bottlers (P) Ltd. The Department rejected the claim as time-barred under Section 11B. The appellants argued that the relevant date for the limitation period should be the date of discovery of the mistake, not the date of filing the refund claim.
4. Doctrine of 'Lis' and its relevance to the date of discovery of the mistake:
The Tribunal observed that the doctrine of 'Lis' supports the view that the cause of action arises when the mistake is discovered. In this case, the mistake was discovered when the Government of India issued the order in the case of Sri Krishna Bottlers (P) Ltd. The Tribunal held that the law applicable on the date of discovery of the mistake, not the date of filing the refund claim, should govern the case. Since Section 11B was not in force at the time of the discovery, the claim should be governed by Common Law, which allows a three-year limitation period from the date of discovery of the mistake.
Conclusion:
The Tribunal concluded that the refund claim was within time as it was filed within three years from the date of discovery of the mistake. The lower authorities were directed to consider the matter accordingly and pass appropriate orders. The appeal was allowed, and it was held that the claim was not time-barred.
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1986 (7) TMI 250
Issues Involved:
1. Whether 'scoured wool' is included in the expression 'raw wool' for the purposes of item 12 of the second schedule of the Indian Tariff Act, 1934.
2. Procedural propriety in the adjudication process by the Collector of Customs, Bombay.
3. Admissibility and weight of evidence presented by both parties.
Detailed Analysis:
1. Inclusion of 'Scoured Wool' in 'Raw Wool':
The central issue in this appeal is whether 'scoured wool' falls under the category of 'raw wool' as per item 12 of the second schedule of the Indian Tariff Act, 1934. The Revenue claims that 'scoured wool' is included in 'raw wool,' while the respondents argue that 'scoured wool' is a distinct commodity. The Collector of Customs, Bombay, in his order, held that the term 'raw wool' should be interpreted in its popular and commercial sense rather than its dictionary or technical sense. He cited authoritative books and trade practices that use 'raw wool' synonymously with 'greasy wool' and concluded that 'raw wool' did not cover 'scoured wool.'
2. Procedural Propriety:
The procedural propriety of the adjudication process by the Collector of Customs, Bombay, was questioned. It was argued that the procedure adopted by the Collector was not in accordance with law, and proper opportunity was not given to the Revenue to present its case. The Collector took up the Bombay matter for adjudication immediately after dropping the Jamnagar matter on the ground of limitation. The Tribunal found that there was no credible material to show that any decision was taken to amalgamate the two matters for adjudication. The Tribunal emphasized that the Collector should have given proper notice to those handling the matter so that the Revenue's point of view and evidence could be placed before him. The Tribunal concluded that the procedure adopted by the Collector did not inspire confidence and did not conform to equity, justice, and good conscience.
3. Admissibility and Weight of Evidence:
The respondents filed a paper book containing 23 documents as evidence, which was objected to by the appellant. The Tribunal allowed these documents to be read as additional evidence, with the weight to be decided after the final hearing. The respondents also relied on various letters, opinions, and statements from experts and trade organizations to support their claim that 'scoured wool' is different from 'raw wool.' The Revenue, on the other hand, presented evidence and opinions from various authorities and experts to argue that 'scoured wool' should be treated as 'raw wool' for export purposes. The Tribunal noted that there was much to be said in support of rival claims and that the Collector of Customs should have considered all the evidence and opinions before making a decision.
Conclusion:
The Tribunal set aside the impugned order and remanded the matter for de novo decision to the Collector of Customs, Bombay. The evidence produced before the Tribunal was to be admitted and read as evidence before the Collector. The parties were given liberty to adduce any further evidence with the permission of the Collector. The Tribunal directed that the matter be decided within six months from the date of receipt of the orders by the Collector of Customs. The appeal was thus allowed by remand.
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1986 (7) TMI 249
Issues Involved:
1. Whether the show cause notices issued under Section 36(2) of the Central Excises and Salt Act were barred by time.
2. Applicability of the third proviso to Section 36(2) concerning short-levied duty.
3. Legality of the review show cause notice dated 2-5-1980.
4. Legality of the review show cause notice dated 21-8-1980 concerning confiscation and penalty.
Detailed Analysis:
1. Whether the show cause notices issued under Section 36(2) of the Central Excises and Salt Act were barred by time:
The respondents contended that the show cause notices were barred by time under the third proviso to Section 36(2) of the Central Excises and Salt Act. The Department argued that the second proviso to Section 36(2) was applicable, making the notices timely. The Tribunal examined the provisions of Section 36(2) and concluded that the third proviso, which prescribes a shorter limitation period, was applicable to the case concerning short-levied duty.
2. Applicability of the third proviso to Section 36(2) concerning short-levied duty:
The Tribunal noted that the show cause notice dated 19-1-77 demanded a specified amount of Rs. 19,88,245.51p as short-levied duty. The Assistant Collector confirmed part of this demand, and the Appellate Collector set aside the Assistant Collector's order. The review show cause notice dated 2-5-80 aimed to set aside the Appellate Collector's order. The Tribunal found that the third proviso to Section 36(2) was applicable because the Appellate Collector's order dealt with the demand for short-levied duty, making the review notice time-barred.
3. Legality of the review show cause notice dated 2-5-1980:
The Tribunal held that the review show cause notice dated 2-5-80 was barred by limitation under the third proviso to Section 36(2). The Tribunal emphasized that the purpose of the review notice was to set aside the Appellate Collector's order, which had confirmed the short-levied duty demand. Since the review notice was issued beyond the prescribed limitation period, it was deemed time-barred.
4. Legality of the review show cause notice dated 21-8-1980 concerning confiscation and penalty:
The Tribunal examined the review show cause notice dated 21-8-80, which related to the confiscation of goods and the levy of penalties. The original show cause notice was dated 15-6-77, and the Appellate Collector's order was dated 10-10-79. The review notice was issued within one year from the date of the Appellate Collector's order, making it timely concerning confiscation and penalties. The Tribunal held that the review notice was not barred by limitation for these aspects, although it was time-barred concerning the demand for duty.
Conclusion:
The Tribunal concluded that the review show cause notice dated 2-5-80 was barred by limitation and should be discharged. However, the review show cause notice dated 21-8-80 was only time-barred concerning the demand for duty but not for confiscation and penalties. Consequently, Appeal No. 1138/80-D was dismissed, and Appeal No. 1059/80-D was to be heard on merits concerning confiscation and penalties.
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1986 (7) TMI 248
Issues:
Appeal against Order-in-Appeal setting aside order-in-original for confiscation of seized textile fabrics and imposition of penalty under Customs Act.
Detailed Analysis:
1. Confiscation of Seized Textile Fabrics:
The case involved the seizure of textile fabrics of foreign origin from the business premises of the appellant. The Adjudicating Authority confiscated the seized goods with an option of redemption fine and imposed a personal penalty under Sections 111 & 112 of the Customs Act. The appellant claimed that some pieces were received for stitching/embroidery under proper vouchers, while others were of Indian origin brought for personal use and stitching/embroidery. The Adjudicating Authority rejected the defense, stating that it was an afterthought and the conditions for importing the goods were violated. On appeal, the Collector of Customs (Appeals) set aside the order, criticizing the investigation for not seizing books of accounts or voucher books, which could have been manipulated. The Collector (Appeals) found faults in the investigation process and heavily criticized the department for biased investigation practices.
2. Bias in Investigation and Acquittal by Collector (Appeals):
The Collector (Appeals) found that the failure to seize records was detrimental to revenue interests as it allowed for potential manipulation of records. The Collector (Appeals) also noted that the investigation did not follow proper procedures and failed to record statements under Section 108 of the Customs Act. The appellant's defense was supported by the Collector (Appeals), who found that the goods seized were covered by the Baggage Receipt and proper vouchers. The appellate authority should not interfere with an order of acquittal unless there is strong and cogent evidence to the contrary. The Tribunal, after reviewing the evidence, found no perversity in the Collector (Appeals) findings and upheld the acquittal.
3. Final Decision and Dismissal of Appeal:
After considering the arguments of both parties and reviewing the record, the Tribunal found that the infirmities in the investigation were supported by the record. However, the allegation of bias in the investigation was deemed excessive. The Tribunal agreed with the findings of the Collector (Appeals) regarding the coverage of goods by the Baggage Receipt and proper vouchers. As no perversity was found in the Collector (Appeals) decision, the Tribunal dismissed the appeal, emphasizing that two possible views should not lead to interference with an order of acquittal without strong evidence to the contrary.
In conclusion, the Tribunal dismissed the appeal, upholding the decision of the Collector (Appeals) and finding no merit in challenging the acquittal.
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1986 (7) TMI 247
Issues:
Levy of countervailing duty on imported refrigeration unit under Item 29A of the Central Excise Tariff.
Analysis:
The case involved a dispute regarding the levy of countervailing duty on a refrigeration unit imported as part of an anodizing plant. The appellants, clearing agents for the importers, contested the imposition of countervailing duty and sought a refund, claiming that the duty was not applicable to the imported goods. The Assistant Collector rejected the claim due to lack of supporting documents. On appeal, the Appellate Collector upheld the levy of countervailing duty on the refrigeration unit separately, based on its value. The Appellate Collector determined that the refrigeration unit fell under Item 29A of the Central Excise Tariff, which covers a wide range of refrigerating and air-conditioning machinery. The original assessment was deemed appropriate by the Appellate Collector.
The appellants further challenged the Appellate Collector's decision through a revision application, which was subsequently presented as an appeal before the Appellate Tribunal. During the hearing, arguments were presented by both parties. The appellants contended that the refrigeration unit was an integral part of the anodizing plant and not a standalone refrigerating unit assessable under Item 29A of the Central Excise Tariff. They provided additional documentation to support their position.
The respondent maintained that the imported refrigeration unit was correctly subject to countervailing duty under Item 29A of the Central Excise Tariff. The Tribunal examined the case records, including the description of the imported refrigeration system provided by the supplier and correspondence indicating modifications to the design of the hardcoater, which involved relocating the refrigeration unit outside the tank.
Upon review of the manufacturer's catalogue and correspondence, the Tribunal concluded that the imported refrigeration unit constituted a complete refrigerating appliance covered under Item 29A of the Central Excise Tariff. Therefore, the Tribunal upheld the Appellate Collector's decision to levy countervailing duty on the refrigeration unit and dismissed the appeal. The judgment affirmed that the scope of Item 29A encompassed the imported refrigerating unit, justifying the imposition of countervailing duty.
In conclusion, the Tribunal ruled in favor of the respondent, confirming the imposition of countervailing duty on the imported refrigeration unit under Item 29A of the Central Excise Tariff, based on the comprehensive analysis of the case records and relevant tariff provisions.
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1986 (7) TMI 246
Issues:
1. Correctness of the order granting refund in terms of relief in excise duty as an incentive to higher production.
2. Time limitation for filing refund claims under Rule 11 of the Central Excise Rules.
Analysis:
Issue 1:
The question for decision in the appeals was the correctness of the order passed by the Appellate Collector of Central Excise, Calcutta, granting the respondents' applications for refund in terms of relief in excise duty as an incentive to higher production under Notification 198/76. The respondents claimed the refund based on exceeding base clearances and entitlement under the notification.
Issue 2:
The respondents filed refund claims for excess clearance of fertilizer during specific periods, which were rejected by the Assistant Collector as time-barred under Rule 11 read with Rule 173J of the Central Excise Rules. The Appellate Collector accepted the claims, stating that the crucial date for counting the time limit under Rule 11 would be the date from which the entitlement to exemption arises. The respondents argued that the limitation should be computed from the date of issue of orders by the Coordinating Assistant Collector determining the base year and clearances.
The appellant relied on a decision of a Special Bench in Collector of Central Excise v. Steel Authority of India regarding the applicability of Rule 11. The respondent cited various decisions to support their position. The Tribunal considered these arguments and previous judgments to determine the time limitation for the refund claims.
The Tribunal held that the claim for refund made between 10-2-1977 to 31-3-1977 was within time, as the respondents had staked their claim by filing a declaration before the amendment of Rule 11. However, the claim for the period after the amendment of Rule 11 was considered time-barred. Therefore, the Tribunal dismissed part of the claim and allowed the rest, based on the timing of the refund claims and relevant legal provisions.
In conclusion, the Tribunal upheld the impugned orders to the extent they related to the respondents' claim for the specific period and set aside the rest of the claim. The appeals were disposed of accordingly.
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