2010 (6) TMI 697 - AT - Central Excise

Issues Involved:
1. Classification of RCC cement blocks.
2. Eligibility for concessional rate of duty under Notification No. 64/88-C.E. and successor notifications.
3. Classification under sub-headings 6807.20 and 6807.90 post-1997.
4. Applicability of extended period of limitation under Section 11A(1) of the Central Excise Act.
5. Eligibility for MODVAT/CENVAT credit on inputs.
6. Eligibility for SSI exemption.
7. Levy of interest under Section 11AB and penalty under Section 11AC.

Detailed Analysis:

1. Classification of RCC Cement Blocks:
The appellant described their products as "hollow/solid cement blocks constituting components of prefabricated buildings falling under Heading 94.06" and claimed the benefit of concessional rate of duty under Notification No. 64/88-C.E. The classification lists filed up to 1990 were approved, but later lists were provisionally approved due to a classification dispute. The department issued show-cause notices alleging that the blocks were used for constructing walls and did not constitute intermediates or components of prefabricated buildings falling under Heading 94.06.

2. Eligibility for Concessional Rate of Duty:
The Tribunal considered whether the appellant was entitled to the benefit of concessional rate of duty under Notification No. 64/88-C.E. and successor notifications. The Tribunal referred to the National Building Code and other technical literature to determine if the blocks could be considered as intermediates or components of prefabricated buildings. The Tribunal concluded that the blocks were used as basic masonry units like bricks and not as components of prefabricated buildings, thus denying the benefit of the notification.

3. Classification Under Sub-headings 6807.20 and 6807.90 Post-1997:
From 1-4-1997, the department wanted to classify the blocks under sub-heading 6807.90 and levy duty at a higher rate. The Tribunal examined whether the blocks could be considered as "of a kind used in prefabricated buildings of Heading 94.06" to grant the benefit of lower duty under SH 6807.20. The Tribunal found that the blocks were not used in prefabricated buildings and upheld their classification under SH 6807.90, denying the benefit of the concessional rate.

4. Applicability of Extended Period of Limitation:
The appellant contested the demand of duty on the ground of limitation, arguing that all relevant facts were disclosed to the department through classification lists and declarations. The Tribunal found that the appellant had not wilfully misstated or suppressed facts and that the extended period of limitation under the proviso to Section 11A(1) was not invocable. Consequently, demands of duty beyond the normal period of limitation were held to be time-barred.

5. Eligibility for MODVAT/CENVAT Credit on Inputs:
The appellant claimed MODVAT/CENVAT credit on inputs as an alternative relief. The Tribunal held that the appellant would be entitled to MODVAT/CENVAT credit on inputs used in the manufacture of concrete blocks if they could prove that such inputs were duty-paid and used in the said manner.

6. Eligibility for SSI Exemption:
The appellant also pleaded for SSI exemption as an alternative to the benefit of Notification 64/88. The Tribunal directed that the appellant's alternative plea for SSI benefit should be considered for the period prior to 1-3-2000.

7. Levy of Interest Under Section 11AB and Penalty Under Section 11AC:
The Tribunal found that the grounds for invoking the extended period of limitation did not exist, and therefore, interest on duty under Section 11AB and penalty under Section 11AC were not leviable. However, the Tribunal held that penal liability under Rule 173Q read with Rule 9(2) was inescapable for the appellant as they had not determined or paid the correct amount of duty during the said period.

Conclusion:
The Tribunal ordered the following:
- Denial of concessional rate of duty under Notification No. 64/88 and successor notifications for the period from June 1988 to March 1997.
- Classification of the products under SH 6807.90 for the period from April 1997 and denial of the benefit of entry 117(2) of Notification No. 5/97-C.E.
- Eligibility for the benefit of Notification No. 6/2000 for the period from 1-3-2000.
- Consideration of the appellant's alternative plea for SSI benefit for the period prior to 1-3-2000.
- Allowance of MODVAT/CENVAT credit on inputs subject to mandatory requirements.
- Allowance of abatement of duty from the sale price to determine the assessable value.
- Holding that demands of duty beyond the normal period of limitation are time-barred.
- No levy of interest under Section 11AB or penalty under Section 11AC.
- Requantification of duty and redetermination of penalty by the Commissioner after giving the appellant a reasonable opportunity of being heard.
- Disposal of all pending classification lists and declarations in light of the Tribunal's order.

The appeal was disposed of accordingly.

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