2010 (8) TMI 280 - AT - Central Excise

Dutiability Intermediate goods used in manufacture of twisted yarn - checks for quality control, denier verification, elongation, strength etc. carried out and the material packed in boxes and earlier the manufacturer was sending it for job work shows that the product have independent name, character and use - evidence has been produced by the department, the burden shifts to the appellants to show that the process of manufacture does not amount to manufacture by showing that the product does not fulfill one of the three requirements - appellants have simply chosen to claim that department has not produced enough evidence which was not the case in both the decisions cited by the appellants No case on merits

Issues involved:
1. Liability to pay central excise duty on intermediate goods used in the manufacturing process.
2. Marketability of the product.
3. Limitation period for demanding duty.
4. Imposition of penalties.

Issue 1: Liability to pay central excise duty on intermediate goods:
The appellant, engaged in manufacturing various types of yarn, disputed the duty demand on partially oriented yarn used in the production of another yarn. The argument focused on whether the goods were marketable. The advocate cited legal precedents to support the contention that mere manufacturing activity does not establish marketability. The Department argued that the goods were capable of being sold based on the manufacturing process and job work done. The Tribunal analyzed the manufacturing process outlined by the Commissioner, emphasizing quality control checks, packaging, and declarations made by the appellant. It concluded that the product had an independent identity, fulfilling the requirements of being marketable. The burden of proof shifted to the appellant to demonstrate that the manufacturing process did not amount to production, which they failed to do. Thus, the Tribunal held that the duty demand was valid.

Issue 2: Marketability of the product:
The Tribunal examined the evidence presented by both parties regarding the marketability of the product. It compared the case at hand with legal precedents where evidence of marketability was crucial. The Tribunal noted that the appellant failed to provide sufficient evidence to refute the marketability of the product. It highlighted the statutory declarations and the process of sending goods for job work as indicators of marketability. Drawing from legal principles, the Tribunal concluded that the product had a distinct character, name, and use, making it marketable. Therefore, the Tribunal upheld the marketability of the product based on the evidence presented.

Issue 3: Limitation period for demanding duty:
Regarding the limitation period for demanding duty, the Tribunal scrutinized the appellant's filings and declarations under relevant rules. It noted that the appellant had provided detailed information in their declarations and returns, indicating no intent to evade duty. The Tribunal found no suppression of facts or misdeclaration that would warrant invoking an extended period for demanding duty. Consequently, the Tribunal ruled that the demand for duty for a specific period was time-barred due to the lack of evidence supporting suppression or intent to evade duty.

Issue 4: Imposition of penalties:
Since the demand for duty was set aside due to the limitation issue, the Tribunal ruled that no penalties could be imposed on the appellants. The Tribunal considered the lack of evidence supporting suppression or misdeclaration as crucial factors in determining the inapplicability of penalties. Consequently, the appeals were allowed on the ground of limitation, leading to the setting aside of the impugned order and the removal of penalties on the appellants.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT, Ahmedabad highlights the key issues addressed, the arguments presented by both parties, and the Tribunal's findings on each issue, ultimately leading to the decision in favor of the appellants based on the limitation aspect and marketability of the product.

← Previous Next →