2014 (2) TMI 1057 - AT - Central Excise

Manufacture of aluminium utensils - SSI Exemption or concessional rate of duty vide Notification No. 10/2002 - Captive consumption - Sometimes utensils are directly made from the sheets or some times sheets are further cut into circles which are used in the manufacture of utensils. Some of the articles like handles to be attached to the utensils are made by the casting process - Held that - duty was being paid on the circles which are captively consumed as they were clearing the utensils free of duty. If the lower authorities comes to a finding that benefit of notification is not available to the appellant and the utensils are leviable to duty, the circles would become exempt on account of captively consumption Notification No. 67/95. The duty already paid on the same would be adjusted against the duty required to be paid by the appellant - issue involved is complex interpretation of law and no mala fide can be attributed to the appellant to impose penalty upon them. We accordingly, set aside the penalty. For the same reason, demand beyond the normal period of limitation would also not to be sustainable - matter is being remanded to the original adjudicating authority for de novo decision for the normal period of limitation - Decided in favour of assessee.

Issues:
1. Interpretation of Notification No. 8/2002 for exemption on duty payment.
2. Determination of aggregate value of clearances for exemption eligibility.
3. Calculation of the value of aluminium circles used in manufacturing utensils.
4. Adjustment of duty paid on captively consumed circles.
5. Imposition of penalty and limitation period for demand.

Analysis:

Issue 1: Interpretation of Notification No. 8/2002
The appellants, engaged in manufacturing aluminium utensils, faced a dispute regarding the availability of Notification No. 8/2002 for duty exemption. The notification required compliance with specific conditions, including the total value of clearances not exceeding Rs. 3 crores in the preceding financial year. The crux of the matter was how to calculate this aggregate value, considering the absence of maintained accounts due to unconditional exemption on utensils and duty payment on aluminium circles under the compounded levy scheme.

Issue 2: Determination of Aggregate Value for Exemption
The notification outlined methods for determining the aggregate value of clearances. It exempted wholly exempted goods from consideration but required the inclusion of non-specified goods like aluminium circles. The dispute centered on calculating the value of aluminium circles cleared or captively consumed by the appellants, especially in the absence of specific records. The Tribunal emphasized the need for the appellants to provide evidence to establish the value of circles used in utensils and other products.

Issue 3: Calculation of Aluminium Circles Value
The controversy revolved around finding the total value of aluminium circles used by the appellants, either directly or in manufactured products. The Revenue calculated the total clearance value without segregating the circles used solely for utensils. The Tribunal highlighted the appellants' failure to conduct the necessary analysis to determine the exact value of circles, suggesting a remand to the adjudicating authority for a detailed assessment with the appellant's cooperation.

Issue 4: Adjustment of Duty on Captively Consumed Circles
In case the benefit of Notification No. 8/2002 was denied, the appellants sought an adjustment of duty paid on captively consumed circles against the duty payable on utensils. The Tribunal agreed that duty paid on circles would be offset if utensils became dutiable, citing Notification No. 67/95 for exempting captively consumed goods.

Issue 5: Penalty and Limitation Period
Regarding penalties, the Tribunal found the issue complex with no malice on the appellant's part, leading to the penalty's setting aside. Similarly, demands beyond the normal limitation period were deemed unsustainable due to the complexity of legal interpretation. The matter was remanded for a fresh decision within the normal limitation period, considering the appellant's submissions and records.

In conclusion, the Tribunal remanded the case for a detailed assessment and decision on duty exemption, value calculation, duty adjustment, and penalty imposition within the specified limitations.

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