2008 (1) TMI 717 - AT - Central Excise

Summary

Issues Involved:
1. Demand of Central Excise duty under Section 11A of the Act, interest, and penalty under Section 11AC.
2. Interpretation of Rule 6(3)(b) of Cenvat Credit Rules, 2004 regarding the removal of an intermediate product, brine solution, without payment of duty.
3. Applicability of the extended period under Section 11A(1) proviso for raising demands.
4. Whether brine solution is marketable and excisable.
5. Requirement of maintaining separate accounts for dutiable final products and exempted brine solution.
6. Consideration of limitation on submitting particulars of removal of brine solution to the department.

Analysis:

1. The appeal was filed challenging the demand of Central Excise duty, interest, and penalty imposed by the Commissioner (Appeals) under relevant provisions of the Act and Cenvat Credit Rules, 2004. The demand was based on irregular Cenvat credit taken by the appellant concerning the removal of brine solution, an intermediate product in the manufacture of Caustic Soda, to their sister concern without duty payment.

2. The appellant argued that brine solution was not marketable and, therefore, not excisable under Rule 6(3)(b) of the CCR. They contended that the particulars of brine solution removal were regularly intimated to the department in monthly returns, hence, the extended period under Section 11A(1) proviso should not be invoked. The appellant cited legal precedents to support their argument that not all items sold are marketable commodities known to commerce.

3. The Respondent contended that brine solution was regularly removed to the sister concern for further manufacturing, making it marketable. They argued against the limitation plea based on periodic submission of information, stating no evidence supported such claims in the records.

4. The Tribunal analyzed the nature of brine solution, concluding that it was marketable and excisable as it had a commercial identity distinct from raw materials used in Caustic Soda production. The Tribunal found the appellant liable to pay duty on the brine solution removed to the sister concern under Rule 6(3)(b) due to the lack of separate accounts for dutiable final products and exempted brine solution.

5. Regarding limitation, the Tribunal found no evidence supporting the appellant's claim of regularly submitting information on brine solution removal without duty payment to the department. Consequently, the Tribunal directed the appellant to make a pre-deposit within a specified time frame, with the possibility of waiver and stay of recovery upon compliance.

This detailed analysis highlights the key legal arguments, interpretations of rules, and the Tribunal's findings on the issues raised in the appeal.