1983 (8) TMI 263 - AT - Central Excise

Summary

Issues Involved:
1. Classification of "glass lumps" under the Central Excise Tariff.
2. Determination of whether "glass lumps" are considered "goods" for excise purposes.
3. Applicability of excise duty to intermediate products.
4. Issue of limitation on the demand for duty.

Detailed Analysis:

1. Classification of "Glass Lumps" under the Central Excise Tariff:

The primary issue was whether the "glass lumps" produced in the appellants' factory were dutiable under Item 23A of the Central Excise Tariff, which covers "other glass and glassware." The appellants argued that the glass lumps were unfinished, unmarketed, and unmarketable goods, not falling under any items of the Central Excise Tariff. The Collector of Central Excise (Appeals) held that the glass lumps were dutiable under Item 23A(4), which includes "other glass and glassware."

The Tribunal agreed with the Collector's view, noting that the term "glass" is of much wider scope than "glassware." The appellants themselves referred to the substance as "glass lumps" and the product made from it as "glass staple fibre," indicating that the material is clearly glass according to the understanding in the trade.

2. Determination of Whether "Glass Lumps" are Considered "Goods" for Excise Purposes:

The Tribunal examined whether the glass lumps could be considered "goods" in the sense that they can come to the market to be bought and sold. The appellants produced correspondence with three manufacturers of glass products who stated that they were not interested in purchasing the glass lumps. However, the Tribunal found this correspondence inconclusive, noting that the appellants were the only manufacturers of glass staple tissue in India, for which the glass lumps were evidently suited. The Tribunal referred to the judgment of the Allahabad High Court in the case of Union of India & Others v. Union Carbide India Ltd., which held that a product might not be known to the general public but could still be considered "goods" if it is known and dealt with by the trade that uses it.

The Tribunal concluded that the glass lumps were indeed "goods" as they were known and used by the trade that manufactures glass staple tissue.

3. Applicability of Excise Duty to Intermediate Products:

The Tribunal considered whether duty could be collected at an intermediate stage. The appellants argued that the glass lumps were not specially manufactured but resulted from excess glass being drawn out. The Tribunal found this contention difficult to accept, noting that the appellants had installed machinery for the manufacture of glass staple tissue, for which the glass lumps constituted the essential raw material. The Tribunal referred to the judgment of the Allahabad High Court in the case of Oudh Sugar Mill Ltd., which held that any by-product, intermediate product, or residual product in the manufacture of particular goods would be covered by the word "production."

The Tribunal concluded that the glass lumps were liable to excise duty as intermediate products.

4. Issue of Limitation on the Demand for Duty:

The Tribunal addressed the issue of limitation, noting that the plea of limitation was raised by the appellants at a very late stage. The Tribunal found no reference to the limitation issue in the earlier stages of the proceedings or in the memorandum of appeal to the Tribunal. The Tribunal observed that the facts relating to the manufacture of glass lumps were brought to the notice of the Central Excise authorities for the first time in a letter dated 16-10-1981, and the first communication in the nature of a demand or a show cause notice was issued on 22-10-1981.

The Tribunal concluded that even if it were held that there was wilful suppression of facts by the appellants, a part of the duty demanded would be time-barred. Specifically, the demand for the period from 1-3-1975 to 22-10-1976 was held to be time-barred.

Conclusion:

The Tribunal upheld the orders of the lower authorities, except for the demand of duty for the period from 1-3-1975 to 22-10-1976, which was held to be time-barred. The duty payable was to be reworked on this basis, and the appeal was rejected except for the relief due to the time-barred period.