Judgment:
1. Hivoltrans Electricals Pvt. Ltd., manufacturer of electrical transformers entered into a contract with Asea Brown Boveri Ltd. and with Tata Projects Ltd. for supply to each quantities of electrical transformers that he manufactured. The transformers were entitled to be supplied to the Maharashtra State Electricity Board in pursuance of a contract between that body on the one hand and Asea Brown Boveri, or Tata Projects for use in projects which were financed by the Japan Bank for International Cooperation. At the relevant time, if the exemption for duty was in terms of notification 108/95 to goods supplied to projects financed by the United Nations or an international organisation approved by the Government of India. The explanation to the notification explains in Clause (a) that an international organisation means an international organisation to which the central government is has declared with provisions of the schedule to the United Nations privilege and imitation 1947 was applied. The exemption was subject to various condition one among which was that the project to which the goods were to be supplied must be financed by an international organisation listed in the annexure to the notification.
The appellant was informed by both its contractors of the projects for which the goods were supplied was financed by the Japan Bank of International Cooperation. These contractors in turn relied upon a certificate dated 28.1.2001 in respect of supply to Tata Projects and 23.10.2000 in respect of supply to Asea Brown Boveri Ltd. The assessee therefore cleared such transformer during the period from 21.12.2000 to 16.6.2001.
2. The department subsequently came to know by correspondence with the Government of India that the Japan Bank of International Cooperation was not an organisation that had been notified within the meaning of the notification and therefore the exemption contained in notification would not be available to the goods cleared by various manufacturers was supplied to the projects financed by that organisation. Notice were issued to various persons, among them the assessee, demanding duty on such clearance and imposed penalty. The notice issued to the assessee before us and its managing director is dated 14.3.2002 and demands duty on clearance made between 21.12.2000 and 16.6.2001. It invoked the extended period of limitation on the ground that the assessee deliberately misdeclared to the department that the notification would be available. The Asst. Commissioner whose order has been confirmed by the Commissioner (Appeals) confirmed the demand for duty and imposed penalty on it and its managing director. Hence these appeals.Danke Electricals vs. CCE appeal 3596/02 the Tribunal had before it an identical case of supply to projects of the government of Maharashtra in terms of this notification. It found that the assessee, the appellant before it, had claimed the benefit of the exemption on being asked to do so by the purchaser of the goods Asea Brown Boveri and supplied a copy of the certificate signed by the technical director empowered of the project of Maharashtra State Electricity Board signed by the Principal Secretary, Government of Maharashtra. Therefore it is held that although the benefit of notification is not available the extended period of limitation could not have been invoked for the reason that the assessee genuinely believed based on the certificate that the project in question was financed by the Japan Bank of International Cooperation and hence the goods covered by the exemption. The same consideration would apply to the case before us. The certificate that we have referred to above contained details of the goods to be supplied by the appellant and indicated that the project is financed by the Overseas Cooperation fund (now Japan Bank of International Cooperation). It indicates that it was issued in pursuance of requirement in notification 108/95. By these certificates the Maharashtra State Electricity Board recommended that the excise duty exemption may be allowed. The price list filed by the appellant also clearly indicate that the goods were being supplied by the project financed by the Japan Bank of International Cooperation.
4. Two factors emerge from these facts. The first is that the appellant believed that the goods were being supplied to a project funded by the Japan Bank of International Cooperation, and could reasonably have believed that the goods were entitled to the exemption. The certificate was signed by a Secretary, a very senior officer of the Government of Maharashtra and any person would normally place credence on such a certificate. Secondly, it is clear that the department had initially accepted the grant of exemption. The notice itself was issued after investigation by the Directorate General of Central Excise Intelligence, and verification from the concerned department of the Government of India that the Japan Bank of International Cooperation was not one of the organisations referred to in the notification.
5. By amendment made on 12.5.2000, the normal period of limitation was increased to one year from six months. Therefore clearance made beyond the normal period of limitation of one year could not have been subjected to duty. The next contentions of the appellant that the notice ought to have been issued by the Additional Director General of Central Excise Intelligence and having been issued by Joint Director it is invalid. Reliance is place upon a circular dated 1.10.2003 issued by the Board. The notice having been issued prior to this date, the contents of this circular are inapplicable. Reliance is next placed upon a photocopy of what is claimed to be a circular of the Board that any notice for levy of duty not exceeding Rs. 1 crore is to be issued by the Commissioner. Section 11A of the Act provides that notice under it for demand of duty should be issued by the Commissioner when the duty does not exceed Rs. 1 crore. The authentication of so called circular has not been established. It bears no number or date from which it could be established that it is a circular of the Board. The second proviso under subsection (1) of Section 11A of the act provide that where the duty is Rs. 1 crore or less, the notice shall be served by the Commissioner of Central Excise or by prior approval anybody subordinate to it. Notice itself proceeds that the notice has been issued by the Additional Director General of Central Excise Intelligence. Therefore the contention of the appellant that the provision of Section are not applied is not accepted. The demand for duty in the normal period is to be confirmed. However having regard to the fact that the assessee has not shown to have acted otherwise than bona fide , we do not think that penalty on the assessee and its managing director was not called for, and set aside the penalty.
6. The matter will have to be remanded to the adjudicating authority solely for the determination of duty payable within the normal period of limitation. Appeal E/1935/03 allowed to this extent and E/1936/03 is allowed.