1997 (2) TMI 492 - AT - Central Excise

Classification of goods - Misdescription - Burden to prove - Flats - M.S. flats - Edge grooving - Demand - Limitation - Suppression

Issues Involved:
1. Classification of mild steel (MS) flats.
2. Allegations of evasion of Central Excise Duty.
3. Dispute over the thickness of the MS flats.
4. Applicability of the extended period of limitation for duty evasion.
5. Imposition of penalty and redemption fine.

Issue-Wise Detailed Analysis:

1. Classification of Mild Steel (MS) Flats:
The primary issue in this appeal was the classification of MS flats of 5 mm thickness. The appellants, M/s. Joshi Steel Industries, contended that their products were bars and not flats. However, the Tribunal noted that the goods were consistently described as MS flats in the appellants' accounts, invoices, and other documents. The Tribunal emphasized that the goods were known and marketed as flats in trade and commerce. The Tribunal referred to the Central Excise Tariff and executive instructions, which defined flats as finished products with specific characteristics, including thickness and edge contour. The Tribunal concluded that the appellants failed to provide evidence to support their claim that the goods were bars and not flats.

2. Allegations of Evasion of Central Excise Duty:
The show cause notice dated 2-5-1986 alleged that M/s. Joshi Steel Industries had manufactured and removed MS flats without payment of Central Excise Duty, without a central excise license, without gate passes, and without submitting or obtaining approval for the Classification List. The Tribunal found that the appellants had not declared the production and removal of excisable goods and had removed the goods without paying any central excise duty. The Tribunal noted that the appellants had suppressed the material facts of production and clearance with the intent to evade payment of duty.

3. Dispute Over the Thickness of the MS Flats:
The appellants contested the measurements of the flats, arguing that the flats manufactured by them exceeded 5 mm in thickness. They requested an independent measurement by the Indian Standard Institution. However, the Tribunal found that the measurements taken by the Central Excise Officers, which showed a thickness of 4.98 mm, were reliable and had been admitted by the appellants at the time of the seizure. The Tribunal noted that the appellants' own records described the goods as MS flats of 5 mm thickness.

4. Applicability of the Extended Period of Limitation for Duty Evasion:
The Tribunal upheld the applicability of the extended period of limitation for the payment of Central Excise Duty. The Tribunal found that the appellants had not disclosed the relevant facts for assessment, levy, and collection of duty to the Central Excise Department. The Tribunal concluded that the appellants had suppressed the facts with the intent to evade duty, justifying the invocation of the extended period of limitation.

5. Imposition of Penalty and Redemption Fine:
The adjudicating authority had confirmed the demand of Central Excise Duty amounting to Rs. 1,24,110.34 and imposed a penalty of Rs. 2 lakhs. A redemption fine of Rs. 500/- was also imposed on the seized goods. The Tribunal found the penalty amount reasonable and did not interfere with the adjudicating authority's decision. The Tribunal took into account the facts and circumstances of the case, including the value of the goods involved (Rs. 11,86,062.71) and the duty evaded, and concluded that the penalty imposed was appropriate.

Conclusion:
The Tribunal dismissed the appeal, confirming the classification of the goods as MS flats, upholding the allegations of duty evasion, and affirming the imposition of penalty and redemption fine. The appellants failed to provide sufficient evidence to support their claims, and the Tribunal found no merit in the appeal.

← Previous Next →