1984 (2) TMI 319 - AT - Central Excise

Issues Involved:
1. Entitlement to benefit of Notification No. 89/79-C.E., dated 1-3-1979.
2. Classification and duty liability of M.S. Pipes and fittings.
3. Classification and duty liability of steel structures.
4. Requirement of Central Excise Licence and its impact on benefit of Notification No. 89/79-C.E.
5. Imposition of penalty.
6. Limitation for demand of duty.

Summary:

1. Entitlement to Benefit of Notification No. 89/79-C.E., dated 1-3-1979:
The main question for decision was whether the appellants, who carried out fabrication work in 1979-80 without obtaining a Central Excise Licence, are entitled to the benefit of Notification No. 89/79-C.E., dated 1-3-1979. The Tribunal concluded that the benefit of the notification should be given to the appellants, as the concession is not dependent on taking out a licence. The demand of duty must be examined based on effective rates provided under the notification and other conditions being fulfilled.

2. Classification and Duty Liability of M.S. Pipes and Fittings:
The appellants claimed exclusion of M.S. Pipes and fittings valued at Rs. 1,69,215.63, arguing they fall under T.I. 26AA and are exempt from duty under Notification No. 69/73-C.E., dated 1-3-1973. The Tribunal agreed, holding that the job work value of Rs. 1,69,215.63 relating to M.S. Pipes and fittings should be excluded from consideration in determining the duty liability.

3. Classification and Duty Liability of Steel Structures:
The appellants argued that operations on structural steel plates and flats did not result in the manufacture of new goods. However, the Tribunal found that the intricate, specialized, and technical nature of the work constituted manufacture, resulting in new goods known as structurals. Consequently, a sum of Rs. 6,92,283.27 was included in the value of clearances made by the appellants during 1979-80.

4. Requirement of Central Excise Licence and Its Impact on Benefit of Notification No. 89/79-C.E.:
The Tribunal held that the benefit of Notification No. 89/79-C.E. should not be denied on the ground that the appellants had not taken out a licence. The notification's concession is not dependent on taking out a licence, and the demand of duty should be based on effective rates provided under the notification.

5. Imposition of Penalty:
The Tribunal found no attempt by the appellants to evade payment of duty, as they had informed the Excise authorities of their activities and voluntarily furnished necessary figures. Considering the facts and circumstances, the imposition of a penalty was deemed unjustified, and the penalty was set aside.

6. Limitation for Demand of Duty:
The plea of limitation was raised but not argued during the hearing. The Tribunal noted that the Excise authorities came to know about the appellants' manufacturing activities and duty liability only after the appellants furnished the necessary particulars. Therefore, the extended period of 5 years was applicable to the demand, and the argument about limitation was not accepted.

Conclusion:
The appeal was partly allowed. The job work value of Rs. 1,69,215.63 representing the value of pipes and fittings was excluded from the value of clearances. The duty liability was restricted to the remaining amount, with the benefit of Notification No. 89/79-C.E. granted. The penalty was set aside, and the respondents' cross-objection was dismissed.

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