1996 (2) TMI 460 - AT - Central Excise

Summary

Issues: Alleged misclassification of goods for duty exemption, exclusion of exported goods from duty calculation, limitation period for declaration, determination of manufacturer status, evidence of exports for duty calculation.

The judgment pertains to an appeal against an order of the Collector of Central Excise, New Delhi, regarding the alleged manufacture and clearance of sterile surgical sutures without duty payment after exceeding the exemption limit under Notification No. 175/86. The appellant argued that they manufactured non-sterile sutures leviable to duty under a different heading and were exempt under Notification No. 279/88. They contended that the duty, if applicable, should be paid by the Institutes handling sterilization. The appellant also claimed that the Collector erred in not considering the value of exported goods in the duty calculation, providing evidence of export through gate passes, certificates, and invoices. The appellant raised a limitation defense due to a missing date on the declaration and failure to inform the Department of exceeding the exemption limit. The Department argued that the appellant was the actual manufacturer based on re-packing, labeling, and testing activities post-sterilization, indicating ownership and manufacturing responsibility.

The appellate tribunal examined the manufacturing process involving sheep/goat caring treatment, twisting, polishing, packing, sterilization at external Institutes, and final repacking by the appellant. The tribunal found that the appellant was indeed engaged in manufacturing sterile surgical catguts, supported by a Drug license and labeling indicating their manufacturing status. The tribunal emphasized that despite sterilization being outsourced, the appellant remained the actual manufacturer responsible for testing and final packaging, distinguishing cited cases. Regarding the limitation defense, the tribunal noted the absence of a declaration date and upheld the extended period due to incomplete information. Concerning exports, the tribunal observed that while shipping bill details were provided, the Collector's denial of benefits lacked merit. The tribunal directed a reevaluation by the Collector, instructing to consider shipping bills as evidence of exports and reduce the quantity cleared without duty accordingly, remanding the matter for further determination and penalty assessment.

In conclusion, the tribunal upheld the appellant's manufacturing liability, rejected the limitation defense, and instructed a reassessment of exported goods for duty calculation based on shipping bill evidence, emphasizing substantive benefits eligibility despite technicalities. The appeal was partially allowed for duty calculation reconsideration, subject to the Collector's review and penalty determination.