2004 (3) TMI 568 - AT - Central Excise

Summary

Issues:
1. Classification of tanks exceeding 300 litres capacity under Central Excise Tariff Act.
2. Discrepancy in declared tank capacity and actual capacity leading to duty liability.
3. Imposition of penalties on the company and directors for misdeclaration of tank capacity.

Classification of Tanks:
The judgment involves three appeals concerning the classification of tanks exceeding 300 litres capacity under the Central Excise Tariff Act. The Revenue contended that tanks declared as 300 litres by the Appellants were found to be of more than 300 litres capacity upon physical verification and quality testing data. The Tribunal upheld the Revenue's claim, stating that tanks exceeding 300 litres are classifiable under sub-heading 3925.10, attracting Central Excise duty. The Tribunal rejected the Appellants' argument that the price per litre should determine the tank's capacity, emphasizing that the difference in price was due to tank quality, not capacity.

Discrepancy in Declared Capacity:
The judgment addressed the issue of a discrepancy between the declared tank capacity and the actual capacity, leading to duty liability. The Appellants manufactured tanks declared as 300 litres but were found to exceed this capacity upon verification. The Tribunal held that the Appellants failed to refute the Revenue's claim of tanks being less than 300 litres, thus imposing duty liability. The Tribunal also ruled that the price should be considered as cum-duty price for re-determination of assessable value, following a precedent decision.

Imposition of Penalties:
Regarding the imposition of penalties on the company and directors for misdeclaration of tank capacity, the Tribunal upheld the penalty on the company, considering it reasonable at Rs. 1 lakh. However, the penalty on one director was reduced to Rs. 20,000, deeming the initial amount excessive. The Tribunal found the director's involvement in misdeclaration admitted and upheld the penalty on the company. No case was made for imposing a penalty on the other director, as per the Commissioner's findings.

In conclusion, the judgment resolved the issues by classifying tanks exceeding 300 litres capacity under the Central Excise Tariff Act, establishing duty liability due to discrepancies in declared and actual tank capacity, and upholding penalties on the company and one director for misdeclaration.