2002 (7) TMI 801 - AT - Central Excise

Summary

Issues Involved:
1. Whether the appellants manufactured and clandestinely cleared water treatment plants in CKD condition.
2. Whether the demands and penalties confirmed by the Commissioner are sustainable.
3. Whether the demands are barred by limitation.

Summary:

Issue 1: Manufacturing and Clearance of Water Treatment Plants in CKD Condition
The appellants, M/s. Ion Exchange (India) Limited, were alleged to have manufactured and cleared water treatment plants in CKD condition without payment of duty. The department claimed that the appellants procured components, systematically packed them, and sold them as a single entity, thus evading excise duty. The appellants contended that they only traded components and did not manufacture the water treatment plants. The Commissioner found that the appellants' activities amounted to manufacturing and confirmed the duty demand.

Issue 2: Sustainability of Demands and Penalties
The Commissioner confirmed a duty demand of Rs. 4,87,68,512 u/s 11A of the CE Act, 1944, read with Rule 9(2) of the C. Ex. Rules, 1944, and imposed a penalty of Rs. 50,00,000 under Rule 9(2) and Rule 173Q of the C. Ex. Rules, 1944. The appellants argued that their activities did not constitute manufacturing and relied on various case laws to support their claim. The Commissioner, however, held that the appellants' activities of packing and assembling components amounted to manufacturing and upheld the demands and penalties.

Issue 3: Limitation
The appellants argued that the demands were time-barred as the department was fully aware of their activities, and they had previously paid duty under protest, which was later refunded. The Commissioner, however, invoked the extended period u/s 11A, citing suppression of facts by the appellants. The Tribunal, in its majority order, found that the department was aware of the appellants' activities and that there was no suppression of facts. Therefore, the demands were held to be time-barred.

Majority Decision:
The Tribunal, by majority, held that the appellants were not manufacturing water treatment plants and that the demands were time-barred. The impugned order was set aside, and the appeal was allowed with consequential relief.