2005 (7) TMI 482 - AT - Central Excise

Summary

Issues:
1. Waiver of pre-deposit of duty and penalties on the Director.
2. Classification of goods as articles of stationery.
3. Allegations of suppression and intent to evade payment of duty.
4. Quantification of demand considering trading activity.
5. Application of extended period of limitation for demand.

Analysis:
1. The applicants sought a waiver of pre-deposit of duty and penalties totaling Rs. 14,59,10,380/- for the period from 1-4-86 to 30-9-2004. The demand was confirmed based on the production of various paper products, with the Revenue alleging that the cutting and slitting of Jumbo rolls amounted to manufacture attracting Central Excise duty.

2. The applicants argued that the goods in question should be classified as articles of stationery, claiming exemptions applicable to such items. They contended that the Revenue was aware of their activities since 1982, as evidenced by the writ petition filed challenging the registration order, where the Revenue acknowledged the goods as articles of stationery.

3. The Revenue invoked allegations of suppression with intent to evade payment of duty, citing the case law where cutting of ribbons and conversion of rolls were considered as manufacturing activities. The Revenue also highlighted the lack of necessary information provided by the applicants, justifying the demand for an extended period of limitation.

4. The applicants disputed the quantification of the demand, arguing that the duty was incorrectly calculated by including trading activities. They emphasized that as they were not manufacturing the traded goods, no duty should be imposed on those transactions.

5. The Tribunal considered the arguments presented by both sides and found that prima facie, no suppression could be alleged against the applicants. Given that the goods were considered articles of stationery and were exempted from duty, the Tribunal granted a waiver of the pre-deposit of duty and penalties for the appeal hearing, allowing a stay petition and scheduling the appeal for a later date due to the significant revenue involved.

In conclusion, the Tribunal ruled in favor of the applicants, waiving the pre-deposit of duty and penalties, acknowledging the classification of goods as articles of stationery, and dismissing the allegations of suppression based on the information provided and exemptions claimed by the applicants.