2002 (2) TMI 480 - AT - Central Excise

Summary

Issues:
- Interpretation of duty exemption under Notification No. 4/97-C.E.
- Determination of whether cold-rolling process amounts to manufacture.
- Application of time limit under Section 11A(1) of the Central Excise Act.
- Consideration of bona fide belief and suppression of facts.
- Adjustment of duty already paid against the demand of duty.
- Imposition of penalty on the appellants.

Interpretation of Duty Exemption:
The appellants argued that stainless steel utensils they manufacture are exempt from duty under Notification No. 4/97-C.E. They contended that the process they follow, including cold-rolling of hot rolled products, does not attract duty. They cited relevant legal precedents to support their position, emphasizing that they believed in good faith that cold rolling did not constitute manufacture. The Commissioner, however, confirmed the duty demand, leading to a dispute regarding the duty liability on the trimmed circles used for captive consumption.

Cold-Rolling Process as Manufacture:
The Tribunal analyzed the process undertaken by the appellants, involving the transformation of hot rolled products through cold-rolling into circles for sale or captive consumption. Legal precedents, including judgments from the Supreme Court and Appellate Tribunal, were considered to determine whether the cold-rolling process amounted to manufacture. The Tribunal noted that the department failed to provide evidence establishing the duty liability arising from cold rolling. It was emphasized that the emergence of new goods with distinctive characteristics was essential to constitute manufacture, which was not evident in the present case.

Time Limit Application and Bona Fide Belief:
The issue of the time limit under Section 11A(1) of the Central Excise Act was raised by one of the appellants, arguing that the demand for excise duty was beyond the prescribed period. They asserted a bona fide belief in their interpretation of the duty liability, highlighting that they had paid duty at the stage of circles and disclosed the captive consumption in their sale invoices. Legal precedents were cited to support the argument that the extended period for demand did not apply due to the absence of suppression of facts.

Adjustment of Duty and Penalty Imposition:
The appellants sought the adjustment of duty already paid against any outstanding duty demand. They contended that if duty was found payable on cold-rolled products, the duty already paid should be offset. The Tribunal agreed with this position, emphasizing the appellants' compliance with duty payment and the absence of suppression of facts. Consequently, the Tribunal set aside the penalty imposed on the appellants, concluding that no penalty was warranted in the circumstances.

Conclusion:
The Tribunal allowed all three appeals, remanding the matter to the Adjudicating Authority to determine whether the cold-rolling process constituted manufacture and if any duty was payable. It was directed that if duty was found payable, the duty already paid by the appellants should be adjusted accordingly. The Tribunal held that no penalty should be imposed on the appellants, considering the legal precedents and the absence of factual suppression.