2011 (6) TMI 570 - AT - Central Excise

Whether the extended period of time can be invoked Held that - Failure on the part of the appellant to declare that they are adding DEP in duty paid procured ENA cannot be held to be suppression, inasmuch as it is a well known fact, which the excise authorities are required to be in knowledge of, appeals are partly allowed by way of remand

Summary

Issues:
1. Duty liability on denatured alcohol manufactured by adding denaturants.
2. Refund claim for duty paid on denatured alcohol.
3. Applicability of excise duty on denatured alcohol used in the manufacture of after shave lotion.
4. Invocation of extended period for duty demand.

Issue 1: Duty liability on denatured alcohol manufactured by adding denaturants:
The case involved appeals by the department against the Commissioner (Appeals) order regarding duty liability on denatured alcohol. The Tribunal referred to a previous case, Accrapac, where it was held that denatured alcohol at an intermediate stage is excisable and marketable. The Tribunal upheld this view, establishing the dutiability of denatured alcohol. The Tribunal set aside the Commissioner's decision that denatured alcohol is not a manufactured excisable product, concluding that the denaturing process attracts excise duty.

Issue 2: Refund claim for duty paid on denatured alcohol:
The Commissioner (Appeals) had allowed a refund of Rs. 5 lakhs paid by the assessee for denatured alcohol arising at the intermediate stage. However, another refund claim of Rs. 65280 was rejected as it was considered non-refundable under the Central Excise Act. The Tribunal did not delve into this issue in detail as it focused on the duty liability aspect.

Issue 3: Applicability of excise duty on denatured alcohol used in the manufacture of after shave lotion:
The department issued a show-cause notice demanding duty on denatured alcohol used in after shave lotion production. The Commissioner (Appeals) set aside the duty demand, stating that the product obtained by denaturing ethyl alcohol was not covered under the relevant Tariff heading. The Tribunal disagreed, holding that the denatured alcohol was indeed excisable, thus overturning the Commissioner's decision.

Issue 4: Invocation of extended period for duty demand:
The respondent argued that the demand for duty for an extended period was time-barred due to the short-lived nature of denatured alcohol and lack of marketability. However, the Tribunal rejected this argument, emphasizing that the denaturing process is a statutory requirement known to the excise authorities. The Tribunal concluded that the extended period could not be invoked, remanding the case for quantifying the demand within the normal limitation period of one year.

In summary, the Tribunal upheld the duty liability on denatured alcohol, rejected the refund claim, confirmed the excise duty applicability on denatured alcohol used in manufacturing, and disallowed the invocation of the extended period for duty demand, remanding the case for further proceedings within the normal limitation period.