2002 (6) TMI 470 - AT - Central Excise

Yarn - Poly propylene yarn - Dutiability - Marketability - Demand - Limitation - Modvat/Cenvat - Penalty

Summary

Issues involved:
- Whether the Poly-propylene filament yarn of 500 denier (PPFY) manufactured by M/s. Parasrampuria Synthetics Ltd. is chargeable to Central Excise duty.
- Whether the demand of duty is time-barred.

Analysis:

1. Chargeability of Central Excise Duty:
The appellant argued that the yarn of 500 deniers they manufactured was not marketable and was only used in the intermediate stage, thus not attracting Central Excise duty. They relied on test reports from SASMIRA and NITRA indicating low shelf-life and non-marketability. The appellant cited precedents like Moti Laminates Pvt. Ltd. v. CCE to support their claim that goods are dutiable only if marketable. However, the Revenue successfully demonstrated that the yarn was kept in stock and used captively, proving its marketability. Statements from company officials admitted purchasing similar yarn from the market before production. The Tribunal held that the yarn was marketable, thus liable for Central Excise duty.

2. Time-Barred Demand of Duty:
The appellant contended that the demand for duty was time-barred as all clearances were as per classification declarations, and they had cooperated with the authorities by providing technical details and reversing Modvat credit. They cited cases like Pushpam Pharmaceuticals Company v. CCE to support their argument. However, the Revenue argued that the extended time-limit for demanding duty was applicable as the appellant had not disclosed manufacturing the 500 denier yarn. The Tribunal agreed with the Revenue, citing the decision in BPL India Ltd. v. CCE, Cochin, and upheld the invokability of the extended period of limitation.

3. Modvat Credit and Penalty Imposition:
The Tribunal acknowledged the appellant's eligibility to avail Modvat credit on inputs used for the impugned goods. They referenced previous decisions to support this stance. While a penalty was deemed necessary for removing the yarn without paying duty, the Tribunal found the initial penalty excessive. Considering the Modvat credit available, the penalty was reduced to Rs. 50,000 to align with justice. The Tribunal disposed of the appeal with this decision.

In conclusion, the judgment addressed the issues of chargeability of Central Excise duty, time-barred demand of duty, Modvat credit eligibility, and penalty imposition, providing a comprehensive analysis based on legal arguments, precedents, and factual evidence presented during the proceedings.