2010 (8) TMI 382 - AT - Central Excise

Captive consumption - eligible for duty exemption under Notification No. 67/95-C.E - hollow cylindrical profiles used in the induction furnace for manufacture of M.S. Ingots goods not parts suitable for use slowly or principally with induction furnace - same not be classifiable as part of the induction furnace under heading 84.14 and are more specifically covered by heading 73.06 - M.S. Ingots & billets were excluded from the purview of this exemption notification, and the goods in question, being covered by Heading 73.06 were not covered by the definition of capital goods as given in Rule 57Q of Central Excise Rules, 1944 - clearances of the goods, attracted Central Excise Duty Period of limitation - once the manufacture of Steel Formers and their clearances for captive consumption at nil rate of duty by availing full duty exemption under Notification No. 67/95-C.E. had been declared to the department in the CL declaration filed on 30th August 1999, for subsequent period they cannot be accused of suppression of fact and accordingly for that period, the longer limitation period would not be available to the department and the duty demand would be time barred. In view of this, the duty demand survives only for the period prior to30th August 1999.

Summary

Issues:
Classification of Steel Formers under Central Excise Tariff, eligibility for duty exemption under Notification No. 67/95-C.E., time limitation for duty demand, imposition of penalty under Section 11AC.

Classification of Steel Formers:
The dispute centered around the classification of Steel Formers used in the manufacture of M.S. Ingots in an induction furnace. The appellant claimed the Steel Formers were part of the furnace and thus exempt from duty under Notification No. 67/95-C.E., while the department argued they were classifiable under heading 73.06. The Tribunal analyzed the construction and use of Steel Formers, ultimately agreeing with the department's classification under heading 73.06 based on the Central Excise Tariff rules and a Board Circular clarifying the classification.

Eligibility for Duty Exemption:
Since the Steel Formers were classified under heading 73.06, they were deemed ineligible for duty exemption under Notification No. 67/95-C.E. The Tribunal highlighted that the goods in question did not fall under the definition of 'capital goods' during the disputed period, leading to the conclusion that the clearances for captive consumption attracted Central Excise Duty, which the appellant had not paid.

Time Limitation for Duty Demand and Penalty Imposition:
The show cause notice for short-paid duty was issued beyond the one-year limitation period, but the Tribunal found that the longer limitation period under Section 11A(1) applied for the period prior to the appellant's declaration in August 1999. As a result, duty demand and penalty for non-payment of duty were upheld for the period before August 1999. However, for subsequent periods post-declaration, the longer limitation period did not apply, rendering duty demands time-barred. The matter was remanded to the Commissioner (Appeals) for quantification of duty demand and penalty for the period before August 1999.

In conclusion, the Tribunal determined that Steel Formers were classifiable under heading 73.06 and not eligible for duty exemption under Notification No. 67/95-C.E. The duty demand was found to be within time only for the period preceding August 1999, leading to a remand for quantification of duty demand and penalty imposition. The appeal was disposed of accordingly.