WEARWELL TYRE & TUBE IND. Vs. CCE

JUDGEMENT

(1.) The appellants were engaged in the manufacture of vehicle tyres falling under CET Heading 40.11 during the material period. They cleared 456 Nos. of 900 -20 size Nylon tyres labelled "ADV" during the period 1.10.86 to 31.12.86 without payment of duty, treating the goods as tyres of a kind used on animal -drawn vehicles (in short, ADV tyres) falling under sub -heading 4011.10 attracting 'nil' rate of duty under Notification No. 229/82 -CE dated 15.10.1982. The department, by inquiries through its officers, noticed that the above tyres cleared by the appellants were motor, vehicle tyres chargeable to duty @ Rs. 1050 per pc. under CET sub -heading 4011.60, that the appellants did not manufacture ADV tyres at all and that they cleared the above consignment of tyres in the guise of clearing ADV tyres of CET sub -heading 4011.10 chargeable to nil rate of duty. Therefore, a show -cause notice dated 26.4.88 was issued to the appellants raising a demand of duty of Rs. 4,78,800 on the above consignment of tyres cleared without payment of duty during the aforesaid period. The show -cause notice invoked the extended period of limitation under the proviso to Section 11A(1) of the Central Excises and Salt Act, alleging that the appellants had suppressed facts and contravened Central Excise Rules with intent to evade payment of duty. The notice also proposed to impose penalty on the appellants under Rules 9(2) and 209 of the Central Excise Rules, 1944. The allegations wore denied by the party in their reply to the show -cause notice. The adjudicating authority confirmed the demand of duty against the appellants and imposed on them a penalty of Rs. 1.5 Lakhs. Hence the present appeal.

(2.) Examined the records and heard both sides. Exemption from payment of duty was available, during the material period, under Notification No. 229/82 -CE dated 15.10.82 to ADV tyres. Other motor vehicle tyres manufactured and cleared by the appellants were not eligible for the benefit of the Notification as held by this Tribunal earlier in the appellants' own case viz. Wearwell Tyre and Tube Industries v. CCE, Indore / 1999 (105) ELT 313 (Tri.)]. In the present appeal, therefore there is no serious contest of the durability of the goods in question, nor has the counsel for the appellants pressed the point before us.

(3.) Ld. Counsel fairly conceded that the question whether the motor vehicle tyres labelled as ADV tyres were exempt from payment of central excise duty under Notification No. 229/89 -CE had already been settled by the Tribunal against the appellants in their own case reported in 1999 (105) ELT 313. Ld. Counsel, however, challenged the demand of duty on the ground of limitation. He submitted that, during the relevant period, the appellants were under physical control of the department and the latter was aware of their activities. Therefore, the allegation of suppression was not sustainable against the appellants. There was no documentary evidence on record to show that the appellants had suppressed any material fact with intent to evade payment of duty. The extended period of limitation was, therefore, not invocable in this case, counsel argued. The following decisions of the Tribunal were relied on by the counsel: