2007 (10) TMI 18 - AT - Central Excise

Demand Alleged that appellant while computing the total value of clearance, the value of raw material sent to the manufacture was not included but appellant mentioned that he is under bona fide belief that value of job charges only reflected in the declaration Major part is time barred and a part within limitation period to be quantified

Summary

Issues:
- Whether the appellant is liable to pay Central Excise duty for drawing and re-drawing of pipes and tubes?
- Whether the appellant correctly declared the value of clearance for availing small scale exemption notifications?
- Whether the demand raised against the appellant is justified for the period 1997-98 to 2000-01?
- Whether the appellant's failure to include the value of raw material in declarations constitutes an intent to evade duty?
- Whether the demand and penalties imposed on the appellant are justified?

Issue 1: Liability for Central Excise Duty
The appellant, engaged in drawing and re-drawing of pipes and tubes, became liable to pay Central Excise duty after the activity was considered manufacturing post the 1997 Budget introduction of Chapter Note (3) to Chapter 73. The appellant claimed small scale exemption notifications for clearances valued below Rs. 50 lakhs.

Issue 2: Correct Declaration for Exemption
The demand was raised against the appellant for the period 1997-98 to 2000-01, alleging that the value of raw material sent by the principal manufacturer was not included in the clearance value declarations. The adjudicating authority confirmed a duty demand of approximately Rs. 23.52 lakhs and imposed penalties under Section 11AC of the Central Excise Act.

Issue 3: Justification of Demand
The appellant contended that they filed declarations in good faith, believing only job charges needed to be reflected, and were never advised by Central Excise officers to include raw material value. The Revenue alleged suppression of assessable value to evade duty, but the appellant argued lack of intent to evade duty.

Issue 4: Intent to Evade Duty
The Revenue argued the appellant knowingly suppressed the correct assessable value, while the appellant asserted a bona fide belief in disclosing only job charges. The Tribunal emphasized that intention to evade duty must be proven, and failure to disclose raw material value does not automatically imply mala fide intent.

Issue 5: Justification of Penalties
Applying legal precedents, the Tribunal held that the demand was mostly time-barred due to lack of mala fide intent by the appellant. The duty cleared by job workers was reimbursable by the principal manufacturer, indicating no intent to evade duty. Thus, the Tribunal allowed the appeals, holding that the demand was largely barred by limitation, and no penalties were warranted.

This judgment showcases the importance of proving intent to evade duty for invoking exceptional powers under the law, emphasizing the need for strict interpretation of provisions related to duty evasion. The Tribunal's decision highlights the significance of proper guidance by authorities and the burden on the Revenue to establish deliberate intent in duty-related matters.