Gowri Shankar, Member (T)
1. The appellant was engaged in the manufacture of copper and copper articles including alloys. Appellant claimed, and was granted the benefit of Notification 118/88 in respect of copper and brass manufactured by it. Notice was subsequently issued proposing to deny the benefit of the notification on the ground that in the manufacture of these two items, the appellant had used quantities of zinc ranging from 20 to 40%. In the order impugned in the appeal, the Commissioner has confirmed the proposal to deny the benefit of the notification and demanded duty those payable.
2. Advocate for the appellant cites the decision of the Tribunal in Bama Metal Industries v. C.C.E. -1996 (82) E.L.T. 81 and the contents of the Board's Circular No. 138/8/81-C.Ex-IV, dated 24-2-1988 to say that the notification was available to the goods notwithstanding the use of zinc and in any event the extended period which has been invoked will not be applicable, since the appellant was under the bona fide belief that the benefit of the notification is available, and therefore could not have intended to evade duty.
3. The Tribunal's decision in Bama Metal Industries v. C.C.E. considered that where technology required the addition of small quantities of metals other those specified in Chapter 74, the notification would not be denied. It relied on the Board's circular. There is repeated reference - at least three times - in this circular to the use of small quantities of metals such as zinc and brass as a technological necessity. If that were the case, the benefit of the notification would be available. If without use of such metals copper and articles thereof would not be manufactured, the notification would be inoperative, and the addition of these small quantities would have to be ignored by holding that it was the intention in the notification to ignore it.
4. The position, however, is different, where significant quantities of other metals not falling under Chapter 74 are used. In that case, the use of these metals is not a technological requirement for the manufacture of copper out of copper or its alloys. It is obviously the requirement for manufacture of copper alloys, for which zinc or other alloying metal has to be used. The notification however is limited to copper and articles thereof falling under Chapter 74. It cannot be said that it was the intention behind the notification to extent the benefit even in cases where metals not falling within Chapter 74 used were not as a technological necessity in the manufacture of copper, but with an intention to manufacture copper alloys.
5. However, the circular of the Board that has been referred takes a contrary stand. It says, specifically, that the benefit of the notification cannot be denied even if other metals have been added provided the copper content is predominant. The circular does not contain the reasoning leading its conelusion. It is apparently based on the advise of the Ministry of Law which is not before us.
6. We do not consider it necessary to ascertain the correctness or otherwise of the Board's view in the circular. The circular was issued in 1982, ten years before the clearance of the goods by the appellant (in 1992-93 and 1993-94) for which the notice was issued. The circular would have been given wide effect to widely by and the conclusion is inescapable that manufacturers of such products would have been under the belief that the benefit of the notification would be available within the circumstances specified in the Board's circular. There would then be no intention to evade duty. The extended period therefore would not apply and the demand would be barred by limitation.
7. We therefore allow the appeal on this ground, and set aside the impugned order. Consequential relief.