2001 (11) TMI 844 - AT - Central Excise

Issues Involved:
1. Classification of vertical pump components under the Central Excise Tariff.
2. Applicability of exemption notification.
3. Validity of the show cause notice and time-bar.
4. Imposition of penalty under Rule 173Q.

Detailed Analysis:

1. Classification of Vertical Pump Components:
The appellants, manufacturers of power-driven pumps, were issued a show cause notice alleging mis-declaration and non-payment of union excise duty amounting to Rs. 7,77,129.98. The notice asserted that only the bowl assembly of the pump qualified as a power-driven pump under Tariff Item 30A, while the head assembly and column assembly should be classified under Tariff Item 68 and subjected to duty. The appellants contended that all three components together constituted a complete power-driven pump, and thus should be classified under Item 30A, enjoying the exemption under Notification No. 57/78-C.E. The Tribunal found that the classification of the components under Item 68 was not justified without considering their use in the complete pump assembly.

2. Applicability of Exemption Notification:
The appellants argued that even if the components were classified under Item 68, they were exempt from duty under Notification No. 118/75-C.E., which exempts goods used in the same factory or another factory of the same manufacturer. The Tribunal referred to various precedents, including the Supreme Court's decision in 2000 (120) E.L.T. 10 (S.C.) and Tribunal decisions in Dassani Electra (P) Ltd. and Sunrise Structurals and Engineering Pvt. Ltd., which supported the applicability of the exemption for goods used in further manufacturing within the same factory. The Tribunal concluded that the benefit of Notification 118/75 should be extended to the components in question, setting aside the duty demands.

3. Validity of the Show Cause Notice and Time-Bar:
The appellants argued that the show cause notice issued on 23-3-1982 was time-barred under Section 11A of the Central Excise Act. The Collector had held that the non-filing of classification and price lists amounted to suppression, extending the time limit for issuing the notice to five years. The Tribunal did not explicitly address the time-bar issue in detail, as it found the duty demands themselves to be unjustified due to the applicability of the exemption notification.

4. Imposition of Penalty under Rule 173Q:
The Collector had imposed a penalty of Rs. 1,00,000/- under Rule 173Q for contravention of the Central Excise Rules. The appellants contended that there was no contravention justifying the penalty. The Tribunal, having found the duty demands unjustified and the exemption notification applicable, held that the imposition of the penalty was not warranted. Consequently, the penalty was set aside.

Conclusion:
The Tribunal set aside the impugned order, allowing the appeal and granting the benefit of exemption under Notification 118/75 to the components in question. The duty demands and penalty imposed were both annulled, disposing of the appeal in favor of the appellants.

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