JUDGMENT
V.K. Agrawal, Member (T)
1. The issue involved in this Appeal filed by M/s. Himachal Rolling Mills, is whether the benefit of Notification No. 178/88-CE dated 13.5.88 is available in respect of untrimmed Copper circles manufactured by them.
2. Shri M.P. Devnath, learned Advocate, submitted that the Appellants manufactured untrimmed copper circles on job work basis out of gullies (billets) received from M/s. Himachal Metal Industries; that the benefit of Notification No, 178/88 had been disallowed to them on the ground that they had not fulfilled conditions specified in the Notification; that the condition specified in the Notification is that the goods should be made from copper and articles thereof falling within Chapter 74 of the Schedule to the Central Excise Tariff Act on which the duty of excise leviable under the said Schedule or the Additional Duty leviable under the Customs Tariff Act, as the case may be, has already been paid. The learned Advocate, further, submitted the during the period in question the Central Board of Excise & Customs has clarified that the expression ‘duty has already been paid’ in various Notifications would also include nil rate of duty. He also relied upon the decision in the case of Commissioner of Central Excise v. Dhiren Chemicals Industries, 2002 (79) ECC 1 (SC) : 2002 (139) ELT 3 (SC) wherein has been held that Central Board of Excise & Customs Circulars are binding on Revenue even if placing different interpretation than the interpretation the Supreme Court has placed. He, therefore, contended that as the Board had clarified that ‘nil rate of duty’ will also be regarded as payment of duty, benefit of Notification No. 178/98 cannot be denied to them. He, further relied upon the Rajkot Collectorate Trade Notice No. 49/93 dated 27.10.93 wherein it has been mentioned that the Central Board of Excise & Customs have ordered that the concessional rate of duty as contained in Notification No. 178/88 would be available to Copper sheets, plates, circles, strips, foils etc. manufactured from duty paid inputs, namely, copper scrap and wastes through the intermediary excisable goods known as gullies/patties (Billets); that in view of this Circular, waste and scrap received at nil rate of duty will also amount to receipt of the same on payment of duty and non-payment of duty on gullies will not come in the way of availing the exemption under Notification No. 178/88. Finally, he submitted that entire demand is time barred as the demand pertains to the period March 1992 to March 1994 and the show cause notice has been issued on 27.3.97; that they had filed classification list in which they had claimed the benefit of Notification No. 178/88; that further the Appellants in their letter dated 9.6.94 in reply to the Department’s letter dated 9.4.94, had informed the Departmental authorities about factual position and using the scrap obtained without payment of duty; that penalty under Section 11AC of the Central Excise Act cannot be imposed for the period prior to insertion of the Section 11AC in the Central Excise Act.
3. Countering the arguments, Shri V. Valte, learned Senior Departmental Representative, submitted that not evidence has been brought on record by the Appellants to show that the copper scrap was not Kabadi scrap, mainly of old utensils and the Commissioner (Appeals) had given a clear finding that the scrap was not exempted from payment of duty and it was taken as non-duty paid being Kabadi scrap; that, therefore, Rajkot Collectorate Trade Notice No. 49/93 is not applicable. He also submitted that the demand is not hit by the time limit under Section 11A of the Central Excise Act as the fact of scrap being not duty paid was never brought to the notice of the Department; that the letter dated 9.6.94 is subsequent to the period of demand; that it has been held by the Larger Bench of the Tribunal in the case of Nizam Sugar Factory v. Commissioner of Central Excise, Hyderabad 1999 (34) RLT 864 CEGAT that in case of suppression mis-statement etc. notice issued beyond six months from the date of knowledge but within five years from the relevant date is not time barred.
4. We have considered the submissions of both the sides. The benefit of concessional rate of duty prescribed under Notification No. 178/88-CE is available subject to the condition that the appropriate duty has been paid on the inputs and no credit of duty paid on the inputs has been taken by the manufacturer; that the Appellants have not brought on record any material to show that the copper scrap which was used for making gullies have suffered any duty including nil rate of duty. The Board’s clarification to the effect that the expression duty has already been paid would include nil rate of duty’ will be available to them only on their showing that the inputs have suffered nil rate of duty. We agree with the learned Senior Departmental Representative that for the same reason the.Trade Notice 49/93 issued by the Rajkot Collectorate will also not be applicable to the present matter. For want of material on record to show that the inputs in the present matter has suffered nil rate of duty, they are not eligible to draw any benefit from the Board’s Circular or Rajkot Collectorate’s Trade Notice. Accordingly, benefit of Notification No. 178/88 CE is not available. We also do not find any substance in the submissions of the learned Advocate that demand is time barred as the fact has been brought to the notice of the Department only under their letter dated 9.6.94. We observe that the demand is confirmed to the period from March 1992 to March 1994 and the letter by which the Department came to know about the fact is dated 9.6.94 that is, after the period for which the demand is confirmed. It has been held by the Larger Bench of the Tribunal in Nizam Sugar case that any show cause notice is issued beyond the period of six months from the date of acquiring the knowledge, will not be barred by limitation if the show cause notice has been issued within 5 years from the relevant date in case of suppression etc. Accordingly, we uphold the demand of Central Excise duty. However, we find force in the submissions of the learned Advocate that penalty under Section 11AC cannot be imposed on the Appellants for the reason that Section 11AC was inserted in the Central Excise Act with effect from 28.9.96 whereas the demand pertains prior to the said date. Accordingly, we set aside the penalty imposed on the Appellants. The Appeal is thus partly allowed.