JUDGMENT
P.S. Bajaj, Member (J)
1. This appeal has been filed by the appellants against the impugned order-in-original dated 25-9-2002 vide which the Commissioner as the adjudicating authority had confirmed the demand of Rs. 47,31,486/- with equal amount of penalty, for the period November, 1995 to February, 1999 against the appellants by classifying their product under Chapter Heading 87.14 of the CETA, after invoking the extended period of limitation.
2. The facts are not much in dispute. The appellants are engaged in the manufacture of speedometers which are fitted in various types of scooters/motor cycles. Some of the speedometers manufactured by them had features like beam-light and pilot turn indicator. These speedometers are being manufactured by them for 4 types of two-wheelers, i.e. Bajaj Super FE type speedometer for scooters, Enfield Motorcycles, Bajaj M-80 (motorcycle speedometer) and Bajaj Super Scooter. They had been classifying the speedometers under Chapter Heading 90.29 of CETA. Their classification declarations were all approved by the jurisdictional Central Excise authorities from time to time. Later on, the Audit party visited the factory of the appellants on 17-12-99 and objected to the classification of the speedometers manufactured for Enfield motor cycles and Bajaj Super FE under Heading 90.29 as they had the features to indicate high-beam of head-light and pilot turn indicator. The speedometers for these vehicles according to the Audit party were classifiable under 87.14 as parts and accessories. On the basis of that report of the Audit party, the Department raised the duty demand for the period November, 1995 to February, 1999 of Rs. 47,31,486/- by serving show cause notice on the appellants. The Commissioner who adjudicated the show cause notice had affirmed the demand by classifying the speedometers manufactured by the appellants for the above said two-wheelers, under Heading 87.14.
3. In the present appeal, two issues are involved. Firstly, the classification of the speedometers manufactured for Enfield motorcycles and Bajaj Super FE Scooter as according to the appellants, these speedometers are also classifiable under Heading 90.29, while the stand taken up by the Department is that these are classifiable under Heading 87.14. Secondly, whether the extended period of limitation could be invoked for raising the demand for the disputed period, against the appellants.
4. Learned Counsel has contended that the second issue be decided first because if demand is held to be time-barred, the issue of classification may not be gone into and be left open. Learned SDR has also no objection if the limitation issue is decided first before coming to the classification issue.
5. We have heard both sides on the question of limitation. The show cause notice is dated 1-12-2000 while the period for which the duty demand has been raised in the show cause notice is from November, 1995 to February, 1999. On the face of it, the show cause notice had been issued after the expiry of the normal period of limitation. The extended period of limitation has been invoked by alleging that the appellants misdeclared their product under Chapter Heading 90.29, as is evident from the show cause notice. The learned Commissioner in para 12 of the impugned order had also observed that the appellants never declared that the impugned goods were panel. In their classification lists, they always declared it as speedometers. Therefore, the extended period, according to the learned Commissioner for confirmation of duty demand, under proviso to Section 11A of the Act, was invokable.
6. From the record, we find that the appellants had been filing the classification lists from time to time, classifying the speedometers under Chapter Heading 90.29. They disclosed the names of the vehicles for which those were being manufactured by them in those classification declarations. Their all declarations were approved by the Department without any objection. The classification claimed by them was thus accepted by the Department. The fact that the Audit party on 17-12-99 raised the objection about the correct classification of the speedometers on the ground that these were being manufactured for Enfield motorcycles and Bajaj Super FE two wheelers, and had features to indicate high-beam of head light and pilot turn indication, and as such were classifiable under Heading 87.14 of the CETA, could not lead to any inference that there had been suppression of material facts by the appellants from the Department. In their classification declarations, the appellants disclosed the nature of the product as speedometers meant for motorcycles and scooters. It was well within the knowledge of the Department that they were manufacturing speedometers for the two-wheelers and were clearing them as such and not as panels. There is nothing on record to suggest if the clearances of the speedometers were made by the appellants as panels. There is also no material on record to suggest that any officer of the Department visited the factory of the appellants and found that the declarations made by them in the classification list from time to time, were incorrect. The fact that the classification declarations were accepted by the Department as furnished by the appellants without any objection goes a long way to establish that the Department was satisfied with the facts disclosed in those declarations and that is why no objection was raised ever by the Department while approving the same.
7. It is well settled that for invoking the extended period of 5 years, something positive other than mere inaction or failure on the part of the manufacturer, with intent to evade duty, is required to be proved. There has to be conscious or deliberate withholding of information by the manufacturer necessary to invoke larger limitation of 5 years. If the Department had full knowledge or manufacturer had reasonable belief that he is not required to give a particular information, extended period of limitation will not be in-vokable. In this context, reference may be made to the Apex Court judgment rendered in Collector of Central Excise v. Chemphar Drugs and Liniments [1989 (40) E.L.T. 276 (S.C.)] wherein it has been so observed. Similarly, in Indian Oil Corporation Ltd. v. CCE, Vadodara [2003 (55) RLT 732], it has been observed that the extended period would not be invokable in a case where the demand is based on statutory documents i.e. AR3As filed by the assessees. In Kishan Metal Industries v. CCE, Delhi [2003 (153) E.L.T. 329 (T) = 2003 (54) RLT 144], it has been also ruled that where the description of the goods had been given in the classification declaration and the RT-12 returns and sales invoices also showed the nature of goods being supplied. The non-mentioning of use of the goods by the buyers would not amount to suppression of facts and as such extended period could not be invoked.
8. Applying the ratio of law in the above referred cases, in our view, the extended period of limitation could not be invoked against the appellants. As observed above, they had been filing the classification declarations regarding the manufacture of the speedometers for two-wheelers from time to time with the Department and all those were approved without any objection. The Department very well knew that the appellants were manufacturing the speedometers which were to be fitted into the two-wheelers, the details of which were furnished by them in their declarations. Therefore, they could not be charged with the allegations of suppression of material facts about the manufacture of speedometers, by the Department so as to invoke the extended period of limitation. They had been filing the RT-12 returns along with the copies of invoices with the Department wherein also they had been giving the clear description of the speedometers cleared by them from time to time. The demand had been raised only on the basis of the report of the Audit party without collecting any other independent evidence regarding the suppression of any material facts by the appellants. Therefore, proviso to Section 11A of the Act, for invoking the extended period of limitation, could not be made applicable to the case of the appellants. The duty demand raised by the Department, therefore, must be held to be time-barred.
9. Since the impugned order is liable to be set aside on the question of limitation, the issue of classification of the goods in question (speedometers), in our view is not required to be gone into in this appeal. This issue is left open and both sides will be at liberty to raise the same at appropriate time.
10. In view of the discussion made above, the impugned order of the Commissioner is set aside. The appeal of the appellants stands allowed with consequential relief, if any, permissible under the law.