2002 (7) TMI 745 - AT - Central Excise

Summary

Issues Involved:
1. Whether the goods cleared by the appellants can be considered as clearances made for captive consumption.
2. Whether the appellants have suppressed facts from the department warranting demand of duty for a larger period under the proviso to Section 11A(1) of the CE Act, 1944.
3. Eligibility to Modvat Credit on the removals made to Kilburn Electricals Ltd (KEL).

Detailed Analysis:

Issue 1: Captive Consumption
The appellants challenged the order demanding duty for goods cleared under various gate passes, arguing these were for captive consumption. The tribunal found that although the factory was taken over by KEL from 1-4-88, the appellants continued to use their L-4 licence and filed statutory returns in their name till November 1988. The goods were shown as cleared for captive consumption but were actually sent to KEL's factory at Ambattur. The notification No. 217/86, which permits removal for captive consumption, applies only within the factory of production. Since the goods were moved to another factory, the tribunal held that these clearances cannot be considered as captive consumption. Thus, duty is demandable for these removals.

Issue 2: Suppression of Facts and Extended Limitation
The appellants argued that they maintained statutory documents and regularly filed returns, thus longer limitation should not apply. The tribunal noted that appellants did not file classification and price lists for captive consumption and misrepresented the removals as within their factory. The removals to KEL were discovered only through statements during investigations. The tribunal concluded that the appellants withheld information with intent to evade duty, justifying the invocation of the extended period of limitation under the proviso to Section 11A(1) of the CE Act, 1944.

Issue 3: Eligibility to Modvat Credit
The tribunal observed that since the goods were taken over by KEL, any claim for Modvat Credit should have been raised by KEL, not the appellants. As KEL was not in appeal, the claim for Modvat Credit by the appellants was deemed devoid of merit.

Conclusion:
The tribunal upheld the order of the lower authority, confirming the duty demand and penalties imposed on the appellants. The appeal was rejected, affirming that the clearances were not for captive consumption, the extended period of limitation was correctly invoked, and the appellants were not eligible for Modvat Credit. The additional documents submitted by the appellants, including court orders and industrial tribunal proceedings, were found irrelevant to the case.