1984 (2) TMI 318 - AT - Central Excise

Issues Involved:
1. Limitation
2. Whether the items cleared are goods within the meaning of the Central Excises and Salt Act
3. Entitlement to exemption related to job work
4. Clubbing of units for exemption limit under Notification 176/77
5. State function and liability to excise
6. Demand of excise duty on poles when steel and cement are already excised
7. Justification of penalty
8. Reliance on communications from other sources
9. Exemption under Notification 179/77 for goods manufactured without power
10. Calculation of excise duty at the rate prevalent at the time of removal
11. Excise duty on immovable goods
12. Commercial recognition of workshop materials
13. Excise duty on manually made earth coils
14. Separate treatment of articles made in workshops and RCC Pole Units
15. Denial of exemption under Notification 54/75
16. Principles of Natural Justice
17. Denial of exemption under Notification 118/75

Summary:

Issue No. I - Limitation:
The Tribunal held that Rule 9(2) was applicable to these cases, and the only limitation was that contained in Rule 9(2) itself. The demands were issued after the amendment of Rule 9(2) to incorporate the time limits of six months and five years. With the exception of certain appeals, the demands were within the five-year time limit from the date of the show-cause notice.

Issue No. II, XI, XII & XIV - Whether the items cleared are goods within the meaning of the Central Excises and Salt Act:
The Tribunal found that the poles were clearly recognizable articles and covered by Item 68. The argument that the poles were not goods because they were fixed to the ground was rejected. The Tribunal also held that the workshop materials in Appeal No. 133/82 were not adequately discussed in the order and required re-adjudication.

Issue No. III - Entitlement to exemption related to job work:
The Tribunal held that the Board arranged the entire process of manufacture and paid contractors for their labor. The contractors could not be considered as manufacturers. The Board was the manufacturer and not entitled to exemption for job work.

Issue No. IV - Clubbing of units for exemption limit under Notification 176/77:
The Tribunal held that the units were not independent but were all under the Board and subject to common directions and control. Therefore, the production of all units had to be clubbed together for the exemption limit.

Issue No. V - State function and liability to excise:
The Tribunal rejected the argument that the goods were not liable to excise duty because they were the property of the State Government and used for statutory functions. The Supreme Court had conclusively settled that excise duty is not a tax on property within the meaning of Article 285 of the Constitution.

Issue No. VI - Demand of excise duty on poles when steel and cement are already excised:
The Tribunal found no authority for the proposition that because the constituents or raw materials have been subjected to duty, the complete article resulting from further manufacture cannot be subjected to duty under a different entry of the Tariff.

Issue No. VII - Justification of penalty:
The Tribunal found that the imposition of penalties was justified as the appellants acted in deliberate defiance of law, contumacious conduct, and conscious disregard of obligation. However, the penalties were reduced to a nominal amount of Rs. 5,000 in each case, except where they were below this amount.

Issue No. VIII - Reliance on communications from other sources:
The Tribunal held that the Board should be considered as a single manufacturer, and the Collector was justified in observing that when the excisability of the poles had been brought to the notice of the Board in July 1978, the Board should be deemed to be aware of the position.

Issue No. IX - Exemption under Notification 179/77 for goods manufactured without power:
The Tribunal found that power was admittedly used in the majority of cases for mixing concrete, welding, etc. The appellants failed to raise this point at the material time, and the Tribunal was unable to accept this ground.

Issue No. X - Calculation of excise duty at the rate prevalent at the time of removal:
The Tribunal did not go into this issue as the appeal related to this issue was being remanded for re-decision.

Issue No. XIII - Excise duty on manually made earth coils:
The Tribunal did not accept this ground for the same reasons given under Issue No. IX.

Issue No. XIVA - Denial of exemption under Notification 54/75:
The Tribunal found that the exemption was not applicable to the Nellore unit as the number of workers exceeded 50. However, in Appeal No. 2057/83, the case was remanded for re-adjudication as the appellants had taken the plea that they had never employed more than 40 workers.

Issue No. XV - Principles of Natural Justice:
The Tribunal did not go into this issue as it was not pressed by the appellants.

Issue No. XVI - Denial of exemption under Notification 118/75:
The Tribunal found that the term "factory" referred to premises where excisable goods are manufactured. The sites where the poles were embedded in the earth could not be considered as factories, and the goods were not eligible for exemption under Notification No. 118/75.

Final Disposition:
The Tribunal disposed of the 15 appeals with specific directions for each appeal, including rejection, reduction of penalties, and remand for re-adjudication where necessary.

← Previous Next →