2002 (5) TMI 692 - AT - Central Excise

Demand - Limitation - Suppression of facts - Demand - Limitation - Manufacture - Demand - Exemption

Summary

Issues:
1. Barred by limitation
2. Manufacture of goods without payment of duty
3. Eligibility for small scale exemption
4. Eligibility for set off under Notification No. 59/86
5. Duty payable on aluminium scrap
6. Change in stand of authorities for prospective levy
7. Penalty imposition under Rule 173Q

Barred by Limitation:
The Appellants argued that the demand was time-barred as the Department was aware of the facts. The Tribunal found that the activity of converting duty paid containers had been known to the department since 1977. The Assistant Collector had clarified that duty was not chargeable on such activities. Declarations were filed, and inspections were conducted, indicating that the department was aware of the Appellants' activities. Therefore, the plea of carrying out activities under a bona fide belief was accepted, and the demand was held to be barred by limitation.

Manufacture of Goods Without Payment of Duty:
The Tribunal analyzed the process undertaken by the Appellants on duty paid containers and concluded that the activities amounted to manufacture. The Supreme Court precedent was cited to emphasize that any process resulting in a different identifiable product is considered manufacture. The process of converting rounded aluminium bottles into tapered, threaded bottles for different uses was deemed as manufacture, attracting excise duty. The Appellants' argument that the products remained classified under the same sub-heading was dismissed as the products were identifiable goods with distinct functions in the market.

Eligibility for Exemptions and Set Off:
The Appellants claimed eligibility for small scale exemption, set off under Notification No. 59/86, and exemption from duty on aluminium scrap. The Tribunal found that the Appellants had not fulfilled the necessary procedures and requirements to claim these exemptions. The Commissioner's findings on these aspects were not adequately supported, leading to the dismissal of the Appellants' claims for exemptions and set off.

Change in Stand of Authorities and Penalty Imposition:
The Appellants argued against the change in the stand of authorities for a prospective levy and challenged the penalty imposed under Rule 173Q. The Tribunal, however, found that since no duty could be confirmed in the case, no penalty was justified. The penalty under Rule 173Q was set aside, and the appeal was disposed of accordingly.

In summary, the Tribunal ruled in favor of the Appellants on the grounds of limitation, but upheld the classification of their activities as manufacture, denying their claims for exemptions and set off. The penalty imposed was set aside due to the absence of confirmed duty liability.