2004 (5) TMI 364 - AT - Central Excise

Summary

Issues:
1. Claim of exemption under Notification 223/88 for manufacturing 'forgings'.
2. Classification of products under Chapter 84 instead of 7226.90.
3. Process undertaken by job workers and its impact on exemption eligibility.
4. Valuation of scrap at Rs. 5 per kg.
5. Time bar plea and deliberate misdeclaration.
6. Interest under Section 11AB.
7. Penalty under Rule 173Q.
8. Confirmation of the Commissioner's order.

Analysis:
1. The appellants claimed exemption under Notification 223/88 for manufacturing 'forgings' used in various products. They argued for classification under 7226.90 instead of Chapter 84.
2. The process of manufacturing 'forgings' involved open die castings with subsequent operations like trimming, milling, drilling, and step trimming. The Commissioner concluded that these processes did not align with the notification's requirements, leading to classification under Heading 84.83.
3. Despite citing various case laws, the appellants failed to prove that the processes undertaken did not change the character of the machinery parts, warranting classification under 84.83. The Commissioner's decision regarding classification and exemption eligibility was upheld.
4. The valuation of scrap at Rs. 5 per kg, based on challans from a specific company, was deemed correct, supporting the duty demands.
5. The plea of time bar was rejected as deliberate misdeclaration was evident, even though the processes were not initially mentioned in the classification list. The Commissioner's decision on the time bar was upheld.
6. The plea for interest under Section 11AB was accepted due to the Show Cause Notice being issued before the introduction of the section.
7. A penalty of Rs. 5 lakhs under Rule 173Q, along with a redemption fine of Rs. 1 lakh, was imposed on the appellant for a duty demand of Rs. 27,10,789, which was upheld.
8. The appeal was dismissed, confirming the Commissioner's order, leading to the imposition of penalties and fines as per the ruling.