1984 (8) TMI 325 - AT - Central Excise

Issues Involved:

1. Exceeding the clearance limit under Notification No. 176/77-CE.
2. Justification of the demand for duty and penalty imposed by the Collector of Central Excise.
3. Eligibility for small scale unit benefits.
4. Inclusion of job work value and raw material in determining clearance value.
5. Time-barred demand due to alleged suppression of facts.
6. Exclusion of utensils made without the aid of power.
7. Appropriateness of the penalty imposed.

Detailed Analysis:

1. Exceeding the Clearance Limit Under Notification No. 176/77-CE:

The Tribunal examined whether the appellants exceeded the clearance limit stipulated under Notification No. 176/77-CE. The Collector of Central Excise determined that the appellants' clearances for the period 1976-77 exceeded Rs. 30 lakhs, thus disqualifying them from the concessions under the notification. The appellants argued that the value of their clearances was within the stipulated limit, but the Tribunal found that the appellants' clearances, including job work and raw materials, exceeded the limit.

2. Justification of the Demand for Duty and Penalty Imposed by the Collector of Central Excise:

The Collector imposed a duty of Rs. 1,60,382.97 and a penalty of Rs. 80,000 for contravention of Rules 9A and 174. The Tribunal upheld the duty demand, finding that the appellants had indeed exceeded the clearance limit. However, the penalty was deemed excessive and was reduced to Rs. 5,000.

3. Eligibility for Small Scale Unit Benefits:

The appellants claimed they were a small scale unit with an investment in plant and machinery not exceeding Rs. 10 lakhs. This was not disputed by the respondent. However, the Tribunal found that the appellants still exceeded the clearance limit, disqualifying them from the benefits under Notification No. 176/77-CE.

4. Inclusion of Job Work Value and Raw Material in Determining Clearance Value:

The appellants argued that only job work charges should be considered, not the value of raw materials. The Tribunal referred to the Supreme Court's decision in Union of India & Ors. v. Bombay Tyres International, which held that both the value of raw materials and job work charges should be included. The Tribunal concluded that the appellants' clearances, including job work and raw materials, exceeded the stipulated limit.

5. Time-Barred Demand Due to Alleged Suppression of Facts:

The appellants contended that the demand was time-barred as the Excise Department was aware of their activities. The Tribunal found no clear evidence that the authorities were aware of the quantum of production. The Collector's order indicated that the appellants had suppressed facts, leading to the invocation of the extended limitation period of five years under Rule 9(2) of the Central Excise Rules, 1944.

6. Exclusion of Utensils Made Without the Aid of Power:

The appellants claimed that utensils made without the aid of power, worth approximately Rs. 5 lakhs, should be excluded. The Tribunal rejected this argument, noting the lack of substantiating documents and the improbability of a rolling mill operating without power.

7. Appropriateness of the Penalty Imposed:

While the Collector imposed a penalty of Rs. 80,000, the Tribunal found this excessive and reduced it to Rs. 5,000, considering the facts and circumstances of the case.

Conclusion:

The appeal was dismissed with a modification in the penalty, reducing it to Rs. 5,000. The Tribunal upheld the duty demand, finding that the appellants exceeded the clearance limit and suppressed facts, justifying the extended limitation period for the demand.

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