2001 (9) TMI 1027 - AT - Central Excise

Demand - Limitation - Suppression of facts - Job work - Benefit of Notification No. 214/86-C.E.

Summary

Issues Involved:
1. Duty liability on grey iron/cast iron (C.I.) castings.
2. Appropriateness of availing exemption notification No. 214/86-C.E.
3. Invocation of the extended period of limitation.
4. Imposition of penalties on the appellants.

Detailed Analysis:

1. Duty Liability on Grey Iron/Cast Iron (C.I.) Castings:
The core issue revolves around the duty liability on grey iron/cast iron (C.I.) castings classified under sub-heading No. 7325.10 of the Central Excise Tariff, manufactured by M/s. Sagun on a job work basis from raw materials supplied by M/s. Bharat. The castings were used in the manufacture of exempted power-driven (PD) pumps by M/s. Bharat. The Commissioner of Central Excise, Kanpur, adjudicated that the benefit of exemption notification No. 214/86-C.E. was wrongly availed for these castings, leading to a demand for Central Excise duty of Rs. 46,28,437/- and corresponding penalties.

2. Appropriateness of Availing Exemption Notification No. 214/86-C.E.:
The appellants argued that they complied with the requisite procedural formalities and were eligible for the benefit of exemption notification No. 84/94-C.E., dated 11-4-1994. They contended that the procedural compliance of Notification No. 84/94-CE had been substantially adhered to. M/s. Sagun, being job workers, maintained that they should not be held liable for duty as they operated under the proper procedure prescribed for job work under Rule 57F of the Central Excise Rules, 1944.

3. Invocation of the Extended Period of Limitation:
The appellants contested the invocation of the extended period of limitation, arguing that they had fully declared their activities to the Department through various documents, declarations, and returns. They maintained that there was no suppression of facts or intent to evade duty. The adjudicating authority, however, alleged suppression and wilful contravention of provisions, citing the lack of specific declarations regarding the use of castings for exempted PD pumps in their classification lists and returns.

4. Imposition of Penalties on the Appellants:
Penalties were imposed on M/s. Sagun, M/s. Bharat, and their directors for alleged suppression and evasion of duty. The appellants argued that they had acted in good faith, following the prescribed procedures and maintaining transparency with the Department. They relied on several legal precedents to support their claim that the penalties were unjustified.

Judgment:
Upon careful consideration, the Tribunal found merit in the appellants' argument regarding the extended period of limitation. The Tribunal noted that all relevant facts had been disclosed to the Department, and there was no justification for alleging suppression or invoking the extended period of limitation. Consequently, the Tribunal set aside the impugned order on the ground of limitation, without delving into the interpretation of Notification No. 214/86-C.E. As a result, the demands for duty and penalties were annulled, and all four appeals were allowed with consequential benefits to the appellants as per law.