2002 (7) TMI 712 - AT - Central Excise

Summary

Issues:
1. Demand of duty on granulated slag by classifying the appellant as a manufacturer.
2. Imposition of duty, interest, and penalty on the appellant by the Commissioner of Central Excise.
3. Challenge to the impugned order on merits and limitation by the appellant.
4. Argument regarding the limitation period for raising the duty demand.
5. The obligation of the appellant to pay duty on the granulated slag.
6. The issue of registration as a dealer instead of a manufacturer for the appellant.
7. Justifiability of invoking the extended period for confirming the duty demand.

Analysis:
1. The appellant, engaged in cement manufacturing, converted molten slag into granulated slag at a unit in another company's premises. The central excise duty on granulated slag was imposed from 23-7-96. The show cause notice alleged the appellant's duty liability as a manufacturer of granulated slag under heading 2618.00. The Commissioner confirmed a duty demand of Rs. 41.73 lakhs, interest, and a penalty.

2. The appellant contested the duty demand on the grounds of not being a manufacturer of granulated slag and the duty already paid by the supplying company. The appellant also argued that the demand was time-barred. The duty demand was challenged on both merit and limitation aspects.

3. The appellant's representative argued that seeking advice from excise authorities and registration as a dealer instead of a manufacturer indicated no intent to evade duty payment. The appellant's actions, including seeking clarification on excise duty, were presented as evidence of good faith compliance.

4. The appellant emphasized the communication with excise authorities regarding budgetary changes and the duty liability on granulated slag. The appellant's efforts to clarify their duty obligations and the subsequent registration as a dealer were highlighted to support the argument against the duty demand.

5. The Revenue contended that the appellant, engaged in manufacturing granulated slag, was obligated to pay duty. The duty payment by the supplying company was deemed irrelevant, and any erroneous payment could be rectified through a refund claim.

6. The Tribunal considered the appellant's actions, including detailed correspondence with excise authorities and registration status as a dealer, as indicative of the Revenue's understanding of the appellant's status. The lack of a manufacturer's license and the registration as a dealer were crucial factors in determining the duty liability and limitation period.

7. The Tribunal found that the appellant had provided all relevant information to the Revenue, and the registration as a dealer indicated the Revenue's acknowledgment of the appellant's status. The Commissioner's failure to justify the extended period for confirming the duty demand led to the conclusion that the demand was time-barred. The impugned order was set aside, and the appeal was allowed in favor of the appellant.