2002 (11) TMI 501 - AT - Central Excise

Summary

Issues Involved:
- Duty liability on hard waste cleared without payment of duty
- Applicability of extended period of limitation for demanding duty

Analysis:

Issue 1: Duty liability on hard waste cleared without payment of duty
The appellants, engaged in manufacturing single yarn for double/multifold yarn production, cleared hard waste at nil duty rate. The Revenue demanded duty on the hard waste as no duty was paid at the single yarn stage. The appellant argued they paid duty on double yarn, exempted if duty paid at single yarn stage. They claimed nil duty rate for hard waste, approved by Revenue. The Tribunal found the demand unjustified as duty was paid on double yarn, indicating non-payment on single yarn. The Revenue's reasoning for invoking extended limitation was deemed unjust as proper officer approved the classification list without further investigation. The Tribunal held the demand time-barred and allowed the appeal on limitation.

Issue 2: Applicability of extended period of limitation
Member (Technical) upheld the duty demand, citing non-disclosure of single yarn production for hard waste. However, Member (Judicial) found the show cause notice accepted single yarn was captively consumed for double/multifold yarn, creating hard waste. The Third Member agreed with Member (Judicial), stating the Department acknowledged single yarn's use for double/multifold yarn and hard waste generation. Consequently, the extended limitation was deemed inapplicable, and the appeals were allowed on the point of limitation.

This comprehensive analysis of the judgment highlights the key issues, arguments presented, and the Tribunal's reasoning for the decision on duty liability and the applicability of the extended period of limitation.