- (1.) Two appeals were filed before the Customs, Excise and Service Tax Appellate Tribunal (hereinafter referred to as 'CESTAT') by the Commissioner of Central Excise against M/s. Pashupati Spinning & Weaving Mills. We are concerned here with sewing thread in the form of hanks, manufactured by the Appellant before us. Two questions were raised before CESTAT. First, that the extended period of limitation, as has rightly been held by the Commissioner (Appeals), would not be available to the Department inasmuch as the Commissioner stated as hereunder:- "As regards the Appellants contention regarding time barred issued of the demand, I find that there had been no suppression of facts on the Appellants' parts. The Appellants have admittedly filed the classification list declaration Under Rule 173B of the Central Excise Rules, 1944 with the Central Excise Department since 7-5-97 claiming therein the benefit of exemption Notification No. 25/97-C.E., dated 7-5-1997 in respect of their product sewing thread but the department had never raised any objection. The Appellants have also been showing the clearance of sewing thread in their invoices while clearing from their factory and also in the detailed calculation charts submitted regularly alongwith the RT-12 returns during the relevant period. Moreover, I also find that the factory of the Appellants was being visited regularly by various agencies of the Central Excise department as would be evident from visits recorded in the RG-1 register but nobody raised this objection during five years when the sewing thread in hank form was always found lying open in the factory premises and was being cleared from the factory premises in hank form. This means everything was in the knowledge of the department. It is further seen that the demand for duty for the period 10/98 to 2/99 was raised vide show cause notice dated 3-5-1999 without levelling in the subsequent show cause notice dated 31-5-2000 in which the demand for the period 7-5-97 to 30-4-1998 has been raised which is also quite contrary to the law as has been settled by the Hon'ble CEGAT in a number of judgments reported at : 1998 (101) E.L.T. 314 (T); 2000 (123) E.L.T. 672 (T); 2000 (125) E.L.T. 510 (T) and 2000 (126) E.L.T. 1057 (T). In all these cases, it has been held that the extended period of limitation would not be invokable when the later show cause notice seeks to demand duty for a period prior to the period involved in the earlier show cause notice. As such, the ratio of these judgments squarely applies to the present case. In view of the above position the demand for duty for the period 7-5-97 to 30-4-1998 is also not sustainable being totally time-barred. The penalty imposed upon the Appellants can also not be sustained when the demand for duty is not sustainable." This was set aside by the CESTAT specifically stating that in one document that was of importance, namely, a declaration made by them, the Respondent (Appellant herein) only disclosed that they would be clearing sewing thread without mentioning that it is in the form of hanks. CESTAT, therefore, found that there was suppression of this vital fact and therefore, the extended period of limitation would be applicable insofar as the second show cause notice dated 31-5-2000 is concerned.
(2.) Secondly, on merits, CESTAT found that Notification No. 4/97 dated 1-3-1997 as amended by Notification No. 25/97, dated 7-5-1997 would not apply so as to exempt the products of the Respondent for the reason that the Tariff Heading under which they fell, namely, Heading No. 55.08 spoke of 'sewing thread of man-made staple fibre'. This would only apply under Note 3 to Section XI of the Schedule to the Central Excise Tariff Act, 1985, if, for the purposes of this Heading, sewing thread is put up on supports (for example, reels, tubes, etc.), of a weight not exceeding 1,000 grams. It is conceded at the Bar that the fact that such sewing thread was in hanks would necessarily mean that it was without any support. On this ground also, on merits, CESTAT allowed the appeal. We have heard learned Senior Counsel on behalf of the Appellant. He has argued before us that the extended period could not be availed on the facts of this case, but has fairly stated that if the notes to Heading No. 55.08 are to be read, considering the fact that there was no support to the sewing thread manufactured by the Appellant, it would not be covered by the exemption Notification which would only apply if goods manufactured fall within the particular Heading mentioned. As it is clear that the sewing thread is not put up on a support, CESTAT is clearly right on merits. Equally, we do not think that there is any ground for interference on the extended period of limitation being applicable inasmuch as CESTAT is again correct in saying that as the declaration and RT-12 returns being vital documents submitted by the Respondent (Appellant herein) did not mention the vital word "hanks", they suppressed a material fact which, to their knowledge, would not bring their sewing thread within the exemption Notification. For all these reasons, we find no merit in these appeals. The appeals are, accordingly, dismissed, without any order as to costs.;