2012 (5) TMI 48 - AT - Central Excise

Demand of duty and penalty - Time limitation - appellant are engaged in the manufacture of Lacquered Metalised Polyester Film as well as Imitation Zari. The appellants were clearing Lacquered Metalised Polyester film on payment of appropriate duty - The case of the Revenue is that the appellants were clearing their final product i.e Lacquered Metalised Polyester film without payment of duty to the job worker and therefore it cannot be said that the same is semi-finished processing to the job worker - Held that as the appellant are registered with the Revenue in the manufacture of two products, one is dutiable and the other is exempted. The appellants were captively consuming part of the Lacquered Metalised Polyester film is used in the manufacture of zari i.e exempted goods. Therefore, it cannot be said that Lacquered Metalised Polyester film is their final product which is liable to duty at the time of clearance to the job worker - Appeal is allowed

Summary

Issues:
1. Duty liability on clearance of Lacquered Metalised Polyester film to job worker for further processing in the manufacture of Imitation Zari.
2. Time-barred demand of duty and penalty due to alleged suppression of facts.
3. Classification of Lacquered Metalised Polyester film as a final product subject to duty.

Analysis:
1. The appellant appealed against the Order-in-Appeal, arguing that they were engaged in manufacturing Lacquered Metalised Polyester Film and Imitation Zari. They cleared Lacquered Metalised Polyester film to a job worker for further processing in making Imitation Zari, which was exempt from duty. The revenue contended that duty should have been paid on the Lacquered Metalised Polyester film. The adjudicating authority confirmed a duty demand and imposed a penalty.

2. The appellant contended that they had informed the Revenue about their activities and mode of clearances in March 1999. They argued that they were paying duty on Zari as per Rule 57CC of the Central Excise Rules. The jurisdictional Superintendent directed them to reverse credit on inputs for the exempted final product. The appellant claimed that the demand was time-barred as the show cause notice was issued in 2000 for the period from September 1999 to July 2000.

3. The Tribunal found that the appellant was registered for manufacturing both Lacquered Metalised Polyester film and Imitation Zari. They were clearing Zari at a reduced duty rate after informing the Revenue in 1999. The Superintendent's directive to reverse credit on inputs for Zari was followed by the appellant. As the appellant was using Lacquered Metalised Polyester film in the production of exempted Zari, it was not considered their final product subject to duty at the time of clearance to the job worker.

In conclusion, the Tribunal set aside the impugned order, ruling in favor of the appellant due to the time-barred nature of the demand and the appellant's compliance with duty payment requirements for the exempted product.