ORDER
G.A. Brahma Deva, Member (J)
1. This appeal arises out of and is directed against the Order-in-Appeal dated 14.10.1998 passed by the Commissioner of Central Excise (Appeals), Bangalore.
2. Smt. Rukmani Menon appearing for the appellants submitted that the point to be considered in this case is whether cost of raw material is to be included in determining the value of clearances for claiming the exemption in terms of Notfn. 1/93. She said that during the financial years 1994-95 and 1995-96 the appellant manufactured polystyrene sheets on their own as well as undertook job work. The benefit of notification has been denied on the ground that for the job work undertaken they did not include cost of raw material in their aggregate turnover. She fairly conceded that if the cost of raw material had been included, they would have crossed the exemption limit of Rs. 3,00,000/- in each financial year. She said that however the same was not to be included in terms of Notifications No. 83/94 and 84/94. She said that it was specifically mentioned in the Show Cause Notice since the supplier has not complied with the wordings of the terms and conditions of the said notification, then the party is not entitled for SSI exemption in terms of Notfn. 1/93. She said that since the goods are exempted, same were not to be included for claiming exemption in terms of Notfh. 83/94 and 84/94. Apart from the merits of the case, she said that demand is also barred by time. The Show Cause Notice was issued on 2.7.1997 for the period 1994-1995 and 1995-1996. In this context, she drew our attention to the Annexure-B wherein it was clearly shown the manufacturing value of Rs. 23,09,980.00 as well as labour charges of Rs. 12,48,807.00. She said that same was the position for the entire period and since the Department was aware of the factual position, it was the bounden duty of the Department to investigate and to raise demand within a reasonable time. She said that demand is clearly barred by time.
3. Shri Muneer Ahmed, appearing for the Revenue submits that to claim the exemption in terms of Notfn. 1/93, appellant should have included the cost of raw material supplied by the supplier to claim the exemption. The Department was just right in raising the demand. As regards the time bar issue, since the simple letter was filed indicating the figures it was not possible for the Department to probe into the matter. In this connection, he drew our attention to the finding given by the lower authority as can be seen from Para 15 of the Order.
15. With regard to limitation the Ld. Advocate vehemently argued that M/s Plastrusions have never suppressed any information from the Department as they were filing simple returns with the department. In these simple returns the job charges received by them have been indicated. I have perused these simple returns. No doubt the job charges received is on account of processing of inputs received under the procedure prescribed by the Department. In the normal course if the assessee had processed the inputs received under Rule 57F(3) or Notification No. 314/86 or 83/94, then the processed inputs are exempt from duty. The assessee never disclosed to the Department that they were following any procedure. In bis statement dtd 18.2.1997 also Shri S.N. Ashok Kumar, Partner of M/s Plastrusions has stated that “for computing the total turnover, the cost of the raw material for the job work done should not be added to the turn-over”. They have not intimated to the Department the items manufactured on job work, whether the raw material supplier has followed the procedure or not, whether the intermediary product is excisable or exempted. It is only after investigation the Department has come to know that the items manufactured on job work been are the same items manufactured on their own account; that the final product manufactured by the supplier of raw material is wholly exempt from payment of Central Excise duty and the supplier of raw materials has not given any undertaking to discharge the duty liability. The Department should have obtained clarification from the Department whether the goods manufactured on job work basis is exempt from payment of duty or not. Under the self removal procedure the burden to follow the procedure and discharge the duty liability is cast on the manufacturer. By filing a simple return with the Department and indicating certain amount as receipt towards labour charges is a mis-statement to mislead the Department that the items manufactured by them are exempt from duty in terms of Notification No. 214/86, Rule 57F(3) or Notification No. 83/94, when actually they are not entitled for the benefits of these Notifications. Therefore the proviso to Section 11A has been correctly invoked.
4. We have carefully considered the submissions made by both sides. We find that on time bar issue, there is sufficient force in the argument advanced on behalf of the assessee. As can be seen from the records with reference to the manufacturing value on their own accord as well as job work, return was filed indicating the figures and since this has not been investigated well in time, it was not the case for raising the demand by invoking larger period. Further, we also take note of the factual position that the aggregate value exceeds the exemption limit of Rs. 30 lakhs. More so it was the duty of the department to investigate whether the party is entitled to exemption or not. The Department has not taken any step to raise the demand well in time. In view of this position and in view of the case laws relied upon by the Counsel in the case of Newton Engineering and Construction Company Put. Ltd. v. CCE, Vadodara which strengthens her own position there is no justification to raise the demand beyond the period of six months. Since the appellants succeed on merits we do not feel it necessary to go into other issues raised by both sides in this appeal. In the result, appeal allowed with consequential relief.
(Pronounced and dictated in open Court)