TMI Blog2011 (2) TMI 991X X X X Extracts X X X X X X X X Extracts X X X X ..... merits. Extended period of limitation invoked - Held that:- As decided in Padmini Products Vs. CCE [1989 (8) TMI 80 - SUPREME COURT OF INDIA] has observed that mere failure or negligence on the part of the manufacturer either not to take out a licence or not to pay duty in case where there was scope for doubt, does not attract the extended limitation, unless there is evidence that the manufacturer knew that goods were liable to duty or he was required to take out a licence - Therefore, find that no ground has been made out for invoking the suppression and extended period in the show cause notice and neither the adjudicating authority nor the appellate authority has considered the issue at all - All seem to think violation of provision o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gauze fabrics classifiable under Chapter 58.03, attracting central excise duty, search was conducted in the respondent s factory on 29.07.02. Statements of various persons were recorded. Samples of the fabrics manufactured by them were drawn and sent for test. Based upon the said test reports proceedings were initiated against the respondent by way of issuance of a show cause notice dated 28.08.03 raising demand of duty of Rs.54,92,809/- for the period 1998-2003 on the ground that the fabrics manufactured by the respondent were in fact leno gauze fabrics, which were properly classifiable under Heading 58.03. 4. After considering the submissions made by the respondents, Commissioner dropped the demand and vacated the show cause notice. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f investigation has not expressed any doubt about the kind of fabric being manufactured by them and as such the plea of bonafide belief cannot be appreciated. He referred to many decisions of the Tribunal laying down that blind belief cannot be cited as excuse for bonafide belief. In as much as the respondents were manufacturing dutiable goods without any registration and without any intimation to the department and their activities were detected only as a result of search, the plea of bonafide cannot be accepted. He further submits that in as much as adjudicating officer has not given a finding on the point of limitation, even if the same has to be considered, the matter should be remanded to the lower authorities as the same goes to the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le us to take a decision on the point of limitation, at this stage itself and as such, remand to decide the issue of time bar, would be an empty formality and would lead to unwarranted increase in litigation. 11. The Commissioner in para 16 of his order under the head discussion and findings has observed that However, the party is under the bonafide impression that the goods manufactured by them does not undergo any process and hence remains grey fabrics and according to them the goods falls under CH.52 as applicable to grey fabrics and remained out of excise control by virtue of being not subjected to any process of manufacture. 12. He has further observed in para 24 as But their submissions that their product is only at grey stage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be held to be a factor reflecting any malafide on their part so as to invoke the longer period of limitation. 15. The Hon ble Supreme Court in the case of Padmini Products Vs. CCE reported in 1989 (43) ELT 195 (S.C.) has observed that mere failure or negligence on the part of the manufacturer either not to take out a licence or not to pay duty in case where there was scope for doubt, does not attract the extended limitation, unless there is evidence that the manufacturer knew that goods were liable to duty or he was required to take out a licence. Admittedly the other manufacturers similarly situate were not paying any duty on the identical fabric being manufactured by them, there can be a scope for bonafide doubt on the part of the res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orting fact/document of evidence. Therefore, we find that no ground has been made out for invoking the suppression and extended period in the show cause notice and neither the adjudicating authority nor the appellate authority has considered the issue at all. All seem to think violation of provision of rules, if cited, is sufficient to invoke extended period and thereby penalty under Section 11AC of Central Excise Act, 1944. Further, from the fact that the issue has to be elaborately discussed by us to come to the conclusion that products are classifiable in CETH 48.20 would also show that if the appellant entertained a view that the goods were not excisable, the benefit of doubt should go to them. 18. In view of foregoing discussion we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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