1998 (10) TMI 365 - AT - Central Excise

Summary

Issues Involved:
1. Excisability and marketability of P.C. acid.
2. Alleged suppression of facts by the appellants.
3. Applicability of the extended period of limitation under Section 11A(1).
4. Breach of principles of natural justice.

Detailed Analysis:

1. Excisability and Marketability of P.C. Acid:
The appellants contended that P.C. acid was not excisable as it was used captively in a continuous integrated process and was not a marketable commodity. They argued that the Collector erroneously concluded that P.C. acid was stable and marketable based on undisclosed technical references, thus denying the appellants the opportunity to address the same. The Department countered that P.C. acid was a well-defined organic chemical with a definite molecular formula and weight, known in the market, and hence excisable. The Tribunal referred to the Supreme Court's judgment in Bhor Industries Ltd. v. CCE, which held that an article must be known in the market or capable of being sold to be considered "goods." The Tribunal found that P.C. acid was isolatable and had sufficient shelf life to be marketable, thus confirming its excisability.

2. Alleged Suppression of Facts:
The appellants claimed that there was no suppression or misstatement of facts regarding the intermediates. The show cause notices issued earlier did not allege suppression, and the classification list and price list were approved by the proper officer. The Department argued that the appellants did not fully explain the manufacturing process, which prevented the Department from concluding the stable condition of P.C. acid. The Tribunal noted that the classification list did not mention P.C. acid, and the write-up provided did not clarify its manufacture, leading to the conclusion that there was a suppression of facts.

3. Applicability of the Extended Period of Limitation:
The appellants argued that the demand was time-barred as it was made beyond the six-month period. The Department invoked the extended period under Section 11A(1) due to the alleged suppression of relevant facts. The Tribunal found that the appellants had not declared the production of P.C. acid in the classification list or elsewhere, justifying the use of the extended period of limitation.

4. Breach of Principles of Natural Justice:
The appellants contended that the reliance on undisclosed technical literature by the Collector amounted to a breach of natural justice. The Vice-President agreed, stating that the Collector should have disclosed the technical literature relied upon to allow the appellants to address it. However, the majority view did not find this argument sufficient to overturn the impugned order.

Separate Judgments:
- Member (J): Rejected the appeal, finding no legal or other infirmity in the impugned order.
- Vice-President: Proposed setting aside the impugned order and remanding the matter for de novo consideration, citing non-disclosure of technical literature and breach of natural justice.
- Third Member (T): Agreed with Member (J), rejecting the appeal and confirming the excisability and marketability of P.C. acid.

Conclusion:
In view of the majority opinion, the appeal was rejected, upholding the duty demand and penalties imposed on the appellants. The Tribunal confirmed that P.C. acid was excisable and marketable, and the extended period of limitation was applicable due to the suppression of facts by the appellants.