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1985 (8) TMI 362 - AT - Central Excise
Issues Involved: Determination of duty liability on soap stone powder u/s Item 68 of Central Excise Tariff, eligibility for exemption u/s Notifications 89/79-C.E. and 105/80-C.E., and time-barred demands for financial years 1979-80 and 1980-81.
Duty Liability on Soap Stone Powder: The appellants argued that grinding soap stone lumps into powder did not constitute manufacture as no new product was created. However, the Department contended that the powder was a distinct product based on Supreme Court precedents, emphasizing differences in appearance, name, use, and characteristics. The Tribunal held that the grinding process resulted in a new product with a different name, character, and use, satisfying the test of manufacture. Time-Barred Demands: The appellants raised a time-bar plea, citing delayed show cause notices. The Department invoked the extended 5-year period u/r 9(2) due to alleged suppression of facts by the appellants. The Tribunal found the plea unsubstantiated, noting that the appellants failed to disclose operations to the authorities, justifying the extended time limit for demands. Exemption Eligibility: The appellants claimed exemption based on job charges and deductions for freight, sales tax, octroi, and packing charges. However, the Tribunal clarified that the exemption notifications required the full intrinsic value of goods to be considered for turnover ceiling limits. The appellants exceeded the ceiling by including these deductions, rendering them ineligible for exemptions. Packing Charges and Other Deductions: The Tribunal examined the appellants' claim regarding packing charges, emphasizing the lack of evidence on returnable gunny bags and agreements with customers. Additionally, deductions for freight, sales tax, and octroi were insufficient to bring the total value of clearances within the exemption ceiling limit of Rs. 30 lakhs. Conclusion: The Tribunal dismissed the appeals, finding no merit in the appellants' arguments regarding duty liability, time-barred demands, exemption eligibility, and deductions for packing charges and other elements.
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