2007 (6) TMI 36 - AT - Central Excise

Dutiability - Revenue contended that the activity of process of lamination granules of LDPE on HDPE fabrics amount to manufacture and accordingly demand were made along with penalty - Matter remanded to original authority for re-determination

Summary

Issues involved:
1. Non-prosecution of appeals filed by certain appellants.
2. Classification of laminated fabrics under sub-heading 3926.90 for excise duty.
3. Whether lamination of HDPE fabrics amounts to manufacture for excise duty purposes.
4. Applicability of Notifications 8/96, 4/97, and 5/98 for exemption.
5. Time limitation for raising demand.
6. Method of quantifying duty demand.
7. Confiscation of assets and imposition of penalty.

Analysis:

1. The appeals filed by certain appellants were dismissed for non-prosecution due to their absence during the hearing despite notices and lack of interest in pursuing the appeals.

2. The issue of classification of laminated fabrics under sub-heading 3926.90 for excise duty was discussed. The main appellant was engaged in lamination of HDPE fabrics using LDPE granules, and the question was whether this process constituted manufacturing a new product chargeable to excise duty.

3. The appellants argued that lamination of HDPE fabrics did not amount to manufacture, citing a Supreme Court decision. They also claimed exemption under various Notifications, stating that the duty demand was time-barred and challenged the method of calculating the demand.

4. The Department contended that lamination of HDPE fabrics constituted manufacturing a distinct product subject to excise duty, citing relevant Supreme Court decisions. They argued that the impugned goods were not exempted under the claimed Notifications.

5. The Tribunal found that the impugned goods were new marketable products manufactured by applying LDPE lamination on HDPE fabrics, making them dutiable under sub-heading 3926.90. The Tribunal also analyzed the eligibility for exemption under the relevant Notifications.

6. Regarding the time limitation for raising the demand, the Tribunal decided to remand the matter for reconsideration based on the submissions made by both sides and the lack of available records to prove contentions.

7. The Tribunal allowed the appeal for re-determination of assessable value, duty amount, limitation, and penalty, remanding the matter to the original authority for a fresh order after providing a reasonable opportunity of hearing to both sides. Confiscation of assets and imposition of penalties were also addressed and set aside where applicable.