2002 (2) TMI 701 - AT - Central Excise

Summary

Issues:
1. Duty demand on the appellants for manufacturing and clearing sewing threads without proper central excise registration and procedure.
2. Applicability of Notification No. 35/95 and Notification No. 84/95 for exemption from duty demand.
3. Time limitation for raising the demand.

Analysis:
1. The appellants were engaged in manufacturing cotton and polyester sewing threads. Central excise officers found unaccounted stock during a raid and issued a show cause notice. The appellants did not respond adequately, leading to a confirmed duty demand and penalties. The Commissioner (Appeals) upheld the duty demand but set aside penalties on the partners. The main contention was whether the yarn manufactured by the appellants qualified as sewing thread under CETA. The Chemical Examiner's report confirmed key characteristics of sewing thread, and the appellants' actions supported this. Thus, the duty demand was justified, and the Commissioner's decision was upheld.

2. The appellants argued for the benefit of Notification No. 35/95 and Notification No. 84/95 to avoid duty payment. However, it was established that they did not pay duty on the yarn purchased, making them ineligible for the exemption under these notifications. Therefore, their claim for exemption was rejected, and the duty demand was upheld.

3. The appellants contended that the demand was time-barred, but the Tribunal disagreed. The demand for the extended period was valid due to the lack of evidence showing the appellants informed the central excise authorities about manufacturing sewing thread without paying duty. Citing precedent cases, the Tribunal ruled that the demand was not time-barred. The appellants' arguments based on other case laws were deemed inapplicable to their situation. The duty demand was upheld, but the penalty was reduced due to the period involved predating relevant legislation. Interest payment was also confirmed.

In conclusion, the Tribunal upheld the duty demand against the appellants, rejected their claims for exemption, and dismissed the argument of time limitation for the demand. The penalty was reduced, and interest payment was confirmed. The Commissioner (Appeals) order was largely upheld, with modifications in penalty amount.