2011 (12) TMI 137 - AT - Central Excise

Manufacture of turpentine oil and rosin assessee claimed nil rate of duty on the ground that the same are manufactured without the aid of power and also demands are time-barred - Held that - Water is lifted to the water tank with the aid of power and the water so lifted is further used in the manufacture of final product, in view of the decision of the Supreme Court in CCE, Nagpur vs. Gurukripa Resins Pvt. Ltd. (2011 - TMI - 204457 - Supreme Court Of India) it is held that the goods are manufactured with the aid of power. Hence turpentine oil, is classifiable under Heading 3805.11 and rosin is classifiable under Heading 3806.11 of the Tariff. Further it is held that the demand beyond the normal period of limitation as provided under the provisions of Section 11A of the Central Excise Act are not sustainable hence set aside. Consequently, the demand for the normal period is confirmed and the Revenue s appeal is allowed to that extent.

Summary

Issues:
Common issue involved in multiple appeals regarding classification of goods manufactured without the aid of power, time limitation for demand, and imposition of penalties.

Classification of Goods:
- M/s. Dujodwala Products Ltd. claimed nil rate of duty for goods manufactured without the aid of power.
- Show cause notices issued demanding duty, interest, and penalties.
- Appeals filed against dropping of proceedings and imposition of penalties.
- Revenue argued that goods were manufactured with the aid of power based on lifting water with electric motors.
- Supreme Court decision in a similar case favored Revenue's argument.
- Supreme Court held that lifting water with power is integral to manufacturing process.
- Court classified turpentine oil under Heading 3805.11 and rosin under Heading 3806.11, as claimed by Revenue.

Time Limitation for Demand:
- Enquiries started in 2003, with DPL providing manufacturing process details.
- Revenue's letters acknowledged use of power in manufacturing process.
- Revenue's contentions found to be without merit, as DPL did not suppress material facts.
- Demand beyond the normal limitation period set aside.
- Penalties also set aside as DPL disclosed manufacturing process in detail.

Imposition of Penalties:
- Penalties on the firm and others set aside as DPL did not suppress facts with intent to evade duty.
- Demands for the normal period confirmed, appeals allowed to the extent indicated.
- Demands for normal period to be recalculated after extending cum-duty-price benefit.

This judgment clarifies the classification of goods manufactured with the aid of power, the time limitation for demanding duty, and the imposition of penalties based on the disclosure of manufacturing processes. The court upheld the Revenue's argument regarding the use of power in the manufacturing process, set aside demands beyond the limitation period, and penalties due to lack of intent to evade duty. The appeals were allowed in part, with demands for the normal period to be recalculated after considering cum-duty-price benefit.