Per Shiben K. Dhar :

Both these appeals involving common question of law and facts were heard together and are being disposed of through this common order.

2. M/s. Orissa Women's Voluntary Services, hereafter referred to as OWVS, the first appellants, entered into an agreement with M/s. Konark Television Ltd. for assembling populated circuit boards (PCBs) out of the parts/components supplied by M/s. Konark Television Ltd. They supplied these assembled PCBs to Konark Television Ltd. without payment of duty in what they claimed was bonafide belief on their part that since certain essential parts like transistors had to be fitted into PCBs at the premises of Konark, the goods in the form they were removed from their premises did not attract excise duty. Collector of Central Excise on initiation of proceedings against OWVS, the first appellants and M/s. Konark Television Ltd., the second appellants, held that OWVS were actual manufacturers who were liable to pay duty. He held that benefit of exemption Notification No. 373/86 dt. 29.7.86 was not available to them since they had not followed Chapter X procedure. He also held that in case OWVS failed to discharge the duty liability, duty is chargeable from Konark since PCBs were got assembled on their account. Penalties were also imposed on both the appellants.

3. Arguing for the appellants, Shri S.A. Mohanty the Learned Advocate on behalf of the OWVS submits that the PCBs manufactured by them were not marketable as such since the essential parts like transistors had to be fitted on to them in the premises of Konark. In any case, he submits assuming any duty was payable the goods were fully exempted under Notification 373/86 since these were admittedly used in the manufacture of television sets of screen size not exceeding 36 cm in the premises of Konark. The Konark also had a L-6 licence but CT-2 certificate was not issued in their favour out of mis-conception. The only procedural irregularity was that Chapter X procedure as such was not followed but there is no dispute about the actual use of these PCBs in the manufacture of television sets at the premises of Konark. The procedural irregularity cannot have the effect of denying substantive benefit which is otherwise admissible under law. In support of his contention, he cites judgement in the case of Collector of Customs Vs. J.K. Synthetics Ltd. as reported 1996 (87) ELT. 582. This referred to the judgement of Hon'ble Apex Court in the case of Thermax Private Ltd. Vs. Collector of Customs as reported in 1992 (61) ELT. 352. It is his contention that the Tribunal itself in a series of orders has held that procedural infraction cannot have the effect of denying substantive benefit under law, and cites the case of CCE Vs. IOL as reported in 1993 (66) ELT. 215, Hyderabad Allwyn Industries Vs. CCE as reported in 1990 (45) ELT. 584, TISCO Vs. CCE as reported in 1994 (70) ELT. 478 and CC Vs. J Fibre Corpn. as reported in 1993 (67) ELT. 320.

4. Arguing on behalf of the Konark Television Ltd. the Learned Advocate, Shri S.K. Mohanty submits that demand itself is time barred and they are not liable to any penalty even apart from the merits of the case. He draws our attention to page 2 of the reply to the show cause notice placed at page 28 of the Appeal E/5057/93-B1 relating to M/s. Konark Television Ltd. He submits that they were regularly filing RT 11 returns in regard to receipt of inputs and when on scrutiny of these returns the Supdt. of Central Excise found that the television sets manufactured were in excess of the PCBs received, they explained to the Central Excise authority that they were receiving PCBs from OWVS who were assembling these on job work basis. In these circumstances, there was no attempt to suppress anything from the department and department knew about this as early as Nov., and Dec., 1990 and therefore, the show cause notice issued on 10.7.92 alleging short levy by invoking extended period under proviso to Section 11A