2002 (2) TMI 617 - AT - Central Excise

Summary

Issues:
Central Excise Duty non-levy due to manufacturing and removal of sewing threads without registration, payment of duty, or observing procedures; eligibility for benefit of Notification No. 1/93; imposition of penalty, confiscation of goods, and machinery.

Analysis:
The case involved a show cause notice issued to the appellants for manufacturing and removing 'Cotton Sewing Thread' and 'Polyester Sewing Thread' without Central Excise Registration, resulting in non-levy of Central Excise Duty amounting to Rs. 1,01,26,690/- during specific years. The Commissioner's order imposed the entire Central Excise Duty on the appellants, confiscated goods, imposed penalties, and ordered redemption of machinery. The appellant admitted to manufacturing sewing threads using specific raw materials and processes, leading to the emergence of a different commercial commodity known as 'Sewing Thread.' The Tribunal concluded that the goods were exigible as 'Sewing Thread' under the respective chapter heading, even if classified under the same heading, duty should be levied. The Tribunal relied on the decision in the case of Laminated Packaging to support this conclusion. The Tribunal also considered the price realized to be cum duty price and ordered a re-determination of the assessable value and duty quantification based on a previous decision.

The Tribunal found merit in the arguments regarding the cum duty price and ordered a remand for re-determination of assessable value and duty quantification. The decision was based on the Larger Bench decision in the case of Sri Chakra Tyres. The Tribunal also ordered the Adjudicator to consider specific observations from the Laminated Packaging case regarding duty paid goods and the concept of 'manufacture' for excise duty purposes. As a result, the Tribunal set aside the penalty and ordered a re-consideration based on the duty amounts determined in the reevaluation proceedings. Ultimately, the appeals were allowed for remand in the specified terms, indicating a detailed reconsideration of duty demands, Modvat set off eligibility, and penalty imposition.