2009 (10) TMI 716 - AT - Central Excise

Summary

Issues:
1. Liability for using common inputs in the manufacture of both dutiable and exempted goods.
2. Merit of the demand and penalty imposed.
3. Time-barred nature of the demand.

Analysis:

Liability for using common inputs:
The appellants appealed against a demand and penalty imposed due to using common inputs in manufacturing both dutiable and exempted goods. The demand was based on Rule 57CC of the Central Excise Rules, holding the appellants liable to pay a percentage of the price of exempted goods. The appellants argued that they had availed credit on the common inputs but the demand far exceeded the credit amount. They contended that the inputs were used at various stages in the manufacturing process of both excisable and exempted goods. The appellants also challenged the sustainability of the demand on its merits.

Merit of the demand and penalty:
The appellants disputed the demand on the grounds that no suppression of facts with intent to evade duty could be alleged against them. They highlighted that they had filed classification lists in 1993 and 1997, duly approved by the proper officer, indicating the manufacturing of exempted goods with nil excise duty liability. The Revenue contended that the appellants suppressed facts by not providing declarations under Rule 57G and failing to submit copies of invoices for the cleared Coal Gas. However, the Tribunal found merit in the appellants' argument regarding the time-barred nature of the demand.

Time-barred nature of the demand:
The show-cause notice was issued in September 2001 for the period September 1996 to August 2000, alleging suppression of facts. The appellants' classification lists from 1993 and 1997, approved by the proper officer, clearly stated the manufacturing of exempted goods with nil excise duty liability. Considering this, the Tribunal concluded that the demand was time-barred. Without delving into the merits, the appeal was allowed based on the issue of time bar, leading to the setting aside of the demand and penalty. The decision was made in favor of the appellants due to the time-barred nature of the demand, and the appeal was allowed accordingly.