R. Jayaraman, Member (T)

1. This is an appeal directed against the order in original bearing No. Addl. Collr. 72/89, dated 21-7-1989. In the aforesaid order the Addl. Collector has invoked the extended period and confirmed the duty demand for a sum of Rs. 8,186 and also imposed a penalty of Rs. 5000/- on the appellants.

2. The facts of the case are that certain goods were cleared from the appellants' factory in December, 1985 and they were received back on 7-1-1986. At the time of receipt, the appellants filed D-3 declaration declaring that the goods have been received back for purpose of re-mixing and repacking. Thereafter, the goods were cleared after reprocessing in February, 1986 under 3 Gate-passes dated 4-2-1986, 18-2-1986 and 21-2-1986. The gate-passes alongwith RT 12 returns were also submitted and clearances under the aforesaid gate passes have been approved by finally assessing the RT 12 returns. However, a show cause notice came to be issued on 22-9-1988, alleging that the aforesaid process amounts to remanufacture and the goods were brought under provisions of Rule 173H, the benefit of clearance without payment of duty would not be available in respect of remanufactured goods. It was also alleged that the fact that the processes amount to remanufacture was not revealed to the Department. In the adjudication proceedings, the aforesaid allegations were confirmed resulting in filing of the present appeal.

3. After hearing both the sides and also perusing the relevant gate-passes as also the D-3 declarations filed for the receipt of the duty paid goods, the following undisputed factual position emerges.

The appellants have clearly indicated in the D-3 declaration that the goods are to be repacked after remixing. These processes were known to the Department and the duty paid nature of the returned goods is also not in dispute. Accordingly, after subjecting the returned duty paid goods to the aforesaid process, they were cleared at Nil duty gate-passes, which was also approved by finalisation of the RT 12 returns. The question whether these processes would amount to manufacture and Rule 173H will be available in such a contingency or not was the issue, which ought to have been considered by the Department when they received the D-3 declaration in the first instance and or at least when those reprocessed goods were cleared on Nil duty GPs. When the process are clearly known to the Department, which in the subsequent opinion of the Department was held to be manufacture, the appellants cannot be blamed that the material facts have been suppressed away from the Deptt. Since the show cause notice was issued only on 22-9-1988 and the allegation of suppression of any material facts is not sustainable the notice is time-barred. In view of the aforesaid position, I allow the appeal and set aside the order.