1982 (1) TMI 190 - CGOVT - Central Excise

Summary

Issues:
- Whether duty under Item 1B of the Central Excise Tariff should be demanded on whole milk powder and skimmed milk powder captively consumed without payment of Central Excise duty.
- Whether the demand for duty on skimmed milk powder captively consumed was correctly confirmed.
- Whether the goods in question were excisable under Item 1B of the Central Excise Tariff.
- Whether the demand raised in 1977 for duty short-levied during the period 1970-75 is time-barred.

Analysis:
1. The judgment involved a revision application and a review case concerning the demand for Central Excise duty on whole milk powder and skimmed milk powder captively consumed by a party. The issue was whether duty should be demanded under Item 1B of the Central Excise Tariff. The party argued that the goods were not excisable under Item 1B as they were not put up in unit containers intended for sale. They also contended that the demand raised in 1977 for duty short-levied during 1970-75 was time-barred under Rule 10 of the Central Excise Rules, 1944.

2. The Government examined the case records and considered the arguments raised by the party. The party had been manufacturing milk powder for captive consumption in the regeneration of liquid milk and milk products without paying Central Excise duty. The Department issued show cause notices and penalties were imposed. The Appellate Collector remanded the case for review, and subsequent proceedings led to the confirmation of duty demands and penalties. The party appealed against these decisions.

3. The Government observed that the goods in question were not put up in unit containers intended for sale and, therefore, could not be considered liable under Item 1B of the Central Excise Tariff. The Government agreed with the party's reliance on a judgment of the Andhra Pradesh High Court, which held that similar products not intended for sale were not liable for Central Excise duty under Item 1B. The Government also noted that the demand raised in 1977 may be time-barred.

4. The party's advocate cited relevant judgments to support their arguments, including the Andhra Pradesh High Court judgment and a Supreme Court judgment regarding time limitations on duty demands. The Government agreed with the interpretation of the Andhra Pradesh High Court and decided to allow the revision application, dropping the proceedings initiated under the Central Excises and Salt Act, 1944.

5. In conclusion, the Government found in favor of the party, holding that the goods in question were not liable for Central Excise duty under Item 1B of the Central Excise Tariff. The judgment highlighted the importance of the intended sale aspect and the applicability of previous court decisions in determining excisability. The time-bar aspect was also considered in the decision to drop the proceedings initiated against the party.