MAHARASHTRA ELECTRIC MOTORS Vs. CCE

JUDGEMENT

(1.) THE appellants manufacture Electric Motors and E.T. Coolers and cleared these goods during 1984 -85 without payment of excise duty under exemption Notification Nos. 64 of 83 and 83 of 83. The impugned order seeks to recover an alleged non -levy of over Rs. 55,000/ -. It also imposes a penalty of Rs. 10,000/ -. A show cause notice was issued by the Assistant Collector on 20.1.1987 for the recovery of the aforesaid duty. This demand was later on confirmed. When the matter reached Commissioner (Appeals), he held that as the notice is beyond the normal period of six months, the Assistant Collector did not have jurisdiction and it should be considered by the Collector who had the jurisdiction. Accordingly, another show cause notice was issued by the Additional Collector on 25.1.1989 alleging evasion of duty by the appellants by resorting to suppression of facts with intent to evade payment of duty. The proceedings initiated by this notice culminated in the impugned order. The dispute arose in this case because the exemption for refrigerating and air -conditioning appliances and machinery under Notification No. 64 of 83 was subject to the condition that the aggregate value of clearances of all excisable goods for home consumption on behalf of a manufacturer from one or more factories or from any factory by or on behalf of one or more manufacturers did not exceed rupees two and a half lakhs during the preceding financial year. The appellants had filed separate declarations for availing themselves of the exemption under Notification No. 83/83 and 64/83 and no mention was made in the declaration relating to Notification No. 64/83 that the appellants were manufacturing Electric Motors also, even though those goods were also fully exempt in view of the value of clearances remaining within full exemption. The impugned order holds that non -declaration of the clearances of Electric Motors in the declaration for exemption filed in respect of refrigerating and air -conditioning appliances and machinery amounted to suppression of facts with intent to evade payment of duty.

(2.) THE appellants have submitted that the demand is clearly time barred as it has been issued beyond the normal period of six months provided under Section 11A. The first notice of 1987 did not invoke proviso to Section 11A of Central Excises Act or allege suppression of facts. Only after the Commissioner (Appeals) pointed out this legal infirmity in the proceedings, another notice was issued by the Additional Commissioner. The appellants have submitted that this second notice was clearly illegal as it has been issued to correct an error in law and as the same has been issued beyond a period of six months of the department becoming aware of the non -payment of duty. They have also submitted that the demand was time barred even otherwise as the appellants had not suppressed the fact of manufacture of Electric Motors. They had filed separate declarations in respect of each item manufactured and both the declarations have been accepted by the Central Excise authorities and the two declarations together gave full particulars of the production and clearances. They have also submitted that their conduct did not fall in the category of suppression of facts with intent to evade payment of duty as the goods not declared were also fully exempt and thereby were not excisable goods. Exempted goods were not excisable goods. In this context, the appellants have submitted that the issue is covered in their favour by the judgments of the Supreme Court in Cosmic Dye Chemical v. Collector of Central Excise, Bombay (1995 (75) ELT 721 (SC) :, 1995 (58) ECR 232 (SC)) and Pushpam Pharmaceuticals Company v. Collector of Central Excise, Bombay (1995 (78) ELT 401 (SC) :, 1997 (71) ECR 329 (SC)). They have submitted that the Supreme Court had held in the Pushpam Pharmaceuticals Company case that till Supreme Court decision in Wallace Flour Mills case rendered in, 1989 (1990 (26) ECR 169 (SC) :, ECR C 1549 SC) there were conflicting decisions of the High Courts and the Tribunal on the issue as to whether value of exempted goods was includible while computing value of clearances of excisable goods. The Apex Court had held that in view of conflicting decisions and in the absence of any rule under which the manufacturer is required to disclose the turn -over of exempted goods, the failure to include exempted goods did not amount to suppression of facts.