Hyderabad Polymers (P) Ltd. v. Commissioner Of Central Excise, Hyderabad .

Order

1. This appeal is against the judgment of the Customs, Excise and Gold (Control) Appellate Tribunal dated 24-2-1998.

2. Briefly stated, the facts are as follows:

The appellants are manufacturing HDPE woven tubular fabrics on circular looms. They do this with the aid of power. It is not denied that that fabric would have fallen, at the relevant time, under Tariff Item 54.08 Thereafter, the fabric is cut and one end of the fabric is sewed up without the aid of power and a sack is manufactured. It is not denied that such a sack would fall under Tariff Item 6301 which reads as follows:

“6301.00 Made up textile articles including blankets (other than of wool), tarpaulins, tent, sails for boats. Nil If made without the aid of power.”

3. The question for consideration is whether the appellants are entitled to the benefit of Notification No. 65/87-CE dated 1-3-1987.

4. The show-cause notice was issued to them on 17-6-1991. It was for the period from 4-7-1987 to 29-2-1988. It appears that earlier in 1988 also a show-cause notice had been issued making a demand on a similar issue and for an identical amount. That show-cause notice was dropped. Pursuant to the show-cause notice dated 17-6-1991, the Collector passed an order dated 31-10-1991 wherein, it is, inter alia, held as follows:

“11. On the question of time bar, I agree with the noticee, that having issued a demand in 1988 on similar issue and for identical amount, the question of suppression or misdeclaration would not arise. I also agree with the contention that approval of classification list is a quasi-judicial function to be done after making suitable enquiries by the adjudicating authority. There would therefore be no question of getting the classification list approved and it is rightly an order of the Assistant Collector. Later, even RT 12 have been finally assessed. There is as such no misdeclaration or suppression on the part of the noticee.”

The Collector also held that the appellants were entitled to the benefit of the notification.

5. The appeal filed by the Department before the Customs, Excise and Gold (Control) Appellate Tribunal has been allowed. The Tribunal has held that the appellants are not entitled to the benefit of the notification. On the question of time bar the Tribunal has held that there was suppression of the fact that the tubular fabric was manufactured on circular looms with the aid of power and that the entire process was an integral process in the manufacture of sacks. It was held that the extended period of limitation was available.

6. Before us two questions arise (a) whether the extended period of limitation is available, and (b) whether the appellants are entitled to the benefit of the said notification.

7. The Collector has given a categoric finding that the earlier show-cause notice raised a demand on a similar issue and for an identical amount. That show-cause notice had been dropped. In our view the Tribunal was wrong in still holding that there was suppression of fact or material. This Court has in ECE Industries Ltd. v. CCE (2004) 13 SCC 719, (2004) 164 ELT 236 held as follows:

“4. In P&B Pharmaceuticals (P) Ltd. v. Collector Of Central Excise . (2003) 3 SCC 599, (2003) 2 Scale 390 the question was whether the extended period of limitation could be invoked where the Department has earlier issued show-cause notices in respect of the same subject-matter. It has been held that in such circumstances, it could not be said that there was any wilful suppression or misstatement and that, therefore, the extended period under Section 11-A could not be invoked.

5. In our view, the principles laid down in the above case fully apply here. As earlier proceedings in respect of the same subject-matter were pending adjudication it could not be said that there was any suppression and the extended period under Section 11-A was not available.”

8. On the ratio laid down in this judgment it must be held that once the earlier show-cause notice, on similar issue has been dropped, it can no longer be said that there is any suppression. The extended period of limitation would thus not be available. We are unable to accept the submission that earlier show-cause notice was for a subsequent period and/or it cannot be taken into consideration as it is not known when that show-cause notice was dropped. If the Department wanted to take up such contentions it is for them to show that that show-cause notice was not relevant and was not applicable. The Department has not brought any of those facts on record. Therefore the Department cannot now urge that findings of the Collector that that show-cause notice was on a similar issue and for an identical amount is not correct.

9. We thus hold that the extended period of limitation was not available. In this view, it is not necessary to decide the second point. We leave the question of law open to be decided in an appropriate case.

10. Accordingly, the appeal is allowed. The order of the Tribunal is set aside. There will be no order as to costs.