2002 (1) TMI 830 - AT - Central Excise

Summary

Issues involved:
1. Duty demand confirmation and penalty imposition by the Additional Collector of Central Excise, Mumbai.
2. Barred limitation for duty demand up to 31-7-1983.
3. Whether the activity of cutting longer leads into shorter lengths amounts to manufacture.
4. Duty demand on items bought out by the appellants.
5. Calculation error in duty demand.
6. Imposition of penalty.

Analysis:

1. The appeal arose from the Additional Collector of Central Excise, Mumbai confirming a duty demand of Rs. 19,469.77 against the appellant and imposing a penalty of Rs. 20,000. The appellant contended that the demand was barred by limitation, certain items did not amount to manufacture, and there was a calculation mistake, leading to the appeal.

2. The Tribunal held that the demand for the period up to 31-7-1983 was barred by limitation as the proviso to Section 11A of the Central Excise Act was not invoked in the show cause notice. Therefore, the demand for this period was rejected.

3. Regarding the activity of cutting longer leads into shorter lengths, the Tribunal found that it did not amount to manufacture based on a previous decision. As a result, the duty demand of Rs. 2,142.90 on cut leads payable within six months was set aside.

4. The duty demand on the remaining four items was upheld by the Tribunal as the value of different items forming part of the finished goods is includible, reflecting the correct legal position. Therefore, the duty demand of Rs. 7,563.70 on these items within the normal period of limitation was deemed sustainable.

5. The appellant's claim of a calculation error of Rs. 5,581.35 was rejected by the Tribunal due to the lack of a specific finding by the Commissioner. Since re-verifying this at a late stage would serve no purpose, the contention for deduction of this amount was dismissed.

6. The penalty imposed on the appellant was set aside by the Tribunal because the extended period of limitation was not available to the department in this case, and the appellants were under a bona fide belief at the relevant time. Consequently, the Tribunal upheld the duty demand of Rs. 7,563.70, set aside the remaining duty demand and the penalty imposed, partially allowing the appeal.

7. The appellant had already deposited the entire duty demand confirmed, leading to the Tribunal directing consequential relief to the appellants as noted in the stay order passed.