1990 (1) TMI 252 - AT - Central Excise

Issues Involved:

1. Admissibility of additional evidence.
2. Allegation of clandestine removal and manufacture of goods.
3. Time-bar and suppression of facts.
4. Nature of goods (semi-finished vs. finished).
5. Clubbing of clearances.
6. Limitation and invocation of extended period under Section 11A of the Central Excises and Salt Act.

Issue-wise Detailed Analysis:

1. Admissibility of Additional Evidence:
A Miscellaneous Application was filed to produce additional evidence, including various documents such as RG I extracts, annual stock-taking reports, letters, declarations, dispatch advice, stock accounts, and monthly statements. The appellant argued that these documents were crucial to proving that the Central Excise Officers periodically visited the factory, checked the stocks, and that no discrepancies were found. The respondent contended that except for documents at Sl. Nos. 7 and 8, the other documents might not sustain the appellant's defense. The Tribunal decided to take note of all the documents listed at the time of deciding the appeal.

2. Allegation of Clandestine Removal and Manufacture of Goods:
The Department alleged that the appellants manufactured and cleared "Oil Filter Cartridges" without payment of duty and invoiced them in the names of M/s. Laxmi Enterprises and M/s. ESGI Manufacturing Co. to avail exemption under Notification No. 80/80. The appellant argued that the semi-finished goods were sent to these firms for further processing and were cleared by them. The Tribunal found that the oil filter cartridges were fully manufactured by M/s. K.L.N. Engineering Products (Pvt.) Ltd., and the process done by M/s. Laxmi Enterprises did not amount to manufacture. The evidence supported the Department's case that the appellant was manufacturing and clearing the goods without payment of duty.

3. Time-bar and Suppression of Facts:
The appellant claimed that the Show Cause Notice issued on 19-2-1983 was time-barred as it exceeded the six-month period and lacked allegations of suppression. The Tribunal referred to case laws indicating that the larger period of five years applies only when the Show Cause Notice contains allegations of fraud, collusion, willful misstatement, or suppression of facts. The Tribunal concluded that the details provided in the Show Cause Notice were sufficient to invoke the extended period under Section 11A.

4. Nature of Goods (Semi-finished vs. Finished):
The appellant argued that the oil filter cartridges were semi-finished goods sent to M/s. Laxmi Enterprises and M/s. ESGI Mfg. Co. for further processing. However, the Tribunal found that the oil filter cartridges were fully manufactured by M/s. K.L.N. Engineering Products (Pvt.) Ltd., and the process done by M/s. Laxmi Enterprises did not amount to manufacture. The technical opinion from the Department of Mechanical Engineering, Indian Institute of Science, Bangalore, supported this conclusion.

5. Clubbing of Clearances:
The appellant contended that the clearances of the two partnership firms should not be clubbed. However, the Tribunal found that M/s. Laxmi Enterprises and M/s. ESGI Mfg. Co. were clearing the goods of M/s. K.L.N. Engineering Products (Pvt.) Ltd. under their invoices. The evidence indicated that these firms were not independent units but were clearing the goods on behalf of M/s. K.L.N. Engineering Products (Pvt.) Ltd.

6. Limitation and Invocation of Extended Period under Section 11A:
The appellant argued that the Show Cause Notice did not specifically mention suppression. The Tribunal noted that the details of clandestine removal were provided in the Annexure to the Show Cause Notice, which was sufficient to invoke the extended period under Section 11A. The Tribunal cited the case of M/s. H. Guru Instruments v. CCE, Calcutta, which supported this view.

Conclusion:
The Tribunal dismissed the appeal, finding that the appellant had been manufacturing and clearing the oil filter cartridges without payment of duty. The confiscation of the oil filters and the penalties imposed were deemed reasonable and in order. The appeal filed by M/s. Laxmi Enterprises was also dismissed as the issues were common.

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