2009 (2) TMI 634 - AT - Central Excise

Summary

Issues involved: Determination of duty liability on captively consumed Steel Formers under the Compounded Levy Scheme u/s 3A of the Central Excise Act, 1944 and applicability of limitation period.

Issue 1: Duty liability on captively consumed Steel Formers

The appellants, engaged in manufacturing Non-alloy Steel Ingots under Chapter 72 of the Central Excise Tariff Act, 1985, were alleged to have captively consumed Steel Formers in the induction furnace without payment of duty. The original authority confirmed the duty demand and penalty, which was upheld by the Commissioner (Appeals).

Issue 2: Applicability of limitation period

The learned Advocate contested the duty demand on the grounds that Steel Formers were capital goods exempted by notification No. 67/95-C.E. and that the appellants believed in good faith that they were covered under this notification. The Advocate also cited a Board circular clarifying the leviability of duty on captively consumed Steel Formers. The learned SDR argued for the invocation of the extended limitation period due to the appellants' failure to disclose the captive consumption to the department.

After considering the arguments and records, the Tribunal found merit in the Advocate's submission that the demand was barred by limitation. The Board's Circular dated 20-1-2003 raised doubts on the leviability of duty on Steel Formers, clarifying that duty was payable when captively consumed under the Compounded Levy Scheme during the relevant period. The Tribunal noted that the issue of whether Steel Formers were input or capital goods was resolved by the Board's circular, justifying the appellants' bona fide belief regarding the duty levy. The Tribunal distinguished the case laws cited by the SDR, emphasizing the doubt raised by the Board circular. Consequently, the impugned order was set aside on limitation grounds, and both appeals were allowed with consequential relief.