Full Judgment Text
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CASE NO.:
Appeal (civil) 2749 of 2001
PETITIONER:
CENTRE FOR DEVELOPMENT OF ADVANCED COMPUTING, PUNE
RESPONDENT:
COMMISSIONER OF CENTRAL EXCISE, PUNE
DATE OF JUDGMENT: 27/02/2002
BENCH:
B.N. KIRPAL & SHIVARAJ V. PATIL & BISHESHWAR PRASAD SINGH
JUDGMENT:
JUDGMENT
2002 (2) SCR 103
The following Order of the Court was delivered :
In the instant case, duty is sought to be levied by the respondent by
taking recourse to the extended period of limitation under Section l IA of
the Central Excises Act.
The plea of the appellant is that it was established as a research
organisation and had even been importing goods from abroad and getting
exemption from payment of customs duty on the basis that it was a research
organisation. In reply to the show cause notice in paragraph 2.3 it has
been specifically stated that the appellant was under a bona fide belief
that the goods emerged during the research and experiments were fully
exempt from payment of duty and therefore, no further compliance with the
provisions of Excise Law was called for. Mr. Lakshmikumaran submits that in
view of this explanation, the provisions of Section 11A proviso were not
applicable and he further submits that in actual fact the products supplied
by the appellant emerged out of their research activity and no excise duty
was payable.
We are unable to agree with the learned counsel that what was supplied by
the appellant would come within the meaning of the expression "that the
goods are produced during the carrying out of experiments or research". It
is quite obvious that the appellant had a technical expertise to
manufacture sophisticated equipment on the orders placed on it even though
the appellant is a Research & Development Organisation. As a result of its
research it had acquired sufficient acumen to be able to manufacture the
equipment tailor-made for the use of the purchaser. The equipment so
manufactured in supply cannot be regarded as being a product of research.
We, however, agree with the learned counsel for the appellant that on the
facts of the present case, the extended period of limitation would not
apply. Our attention has been drawn to the fact that the main object as per
the Memorandum of Association whereby the appellant was established, was to
carry out research etc. Furthermore, by letter dated 12th July, 1988, the
Department of Electronics had recognised the appellant as a research and
development unit. A similar recommendation was also made on 7th May, 1991
by the Ministry of Science and Technology, Government of India. Such
recommendation entitled it to make imports from abroad without payment of
customs duty. Under the circumstance, there is no reason to conclude that
the appellant would not have believed that the goods manufactured by it and
supplied were not liable for payment of excise duty. There does not appear
to be any tangible basis for the Department to come to the conclusion that
there was wilful suppression for evasion of duty by the appellant. This
being so, while duty was leviable on the goods manufactured by the
appellant the Department, however, could not invoke the extended period of
limitation of five year under Section l IA of the Act.
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For the aforesaid reasons, this appeal is allowed.