1998 (10) TMI 553 - AT - Central Excise

Summary

Issues Involved:
1. Non-issue of show cause notice to other units.
2. Classification of 'serpent eggs' under Central Excise Tariff.
3. Validity of demands raised beyond the stipulated period.

Summary:

1. Non-issue of show cause notice to other units:
The appellants argued that issuing a notice to the other independent firm, Dawn Fireworks Industries (DFI), was mandatory. The Tribunal referenced the case of Ogesh Industries v. CCE, which held that the failure to issue a show cause notice to all involved units indicates non-application of mind by the authorities, rendering the notice bad in law. The Tribunal upheld this plea, noting that the existence of DFI was not merely on paper and that the department should have issued a show cause notice to DFI to determine if it was a dummy unit.

2. Classification of 'serpent eggs' under Central Excise Tariff:
The appellants contended that 'serpent eggs' manufactured by DFI should be classified under heading 3604.90 of the Central Excise Tariff, attracting a nil rate of duty. The Tribunal referenced the case of Taj Fireworks Industries v. CCE, which supported this classification. Consequently, the Tribunal held that the demand for duty on 'serpent eggs' was not sustainable and set aside the demands raised on this item.

3. Validity of demands raised beyond the stipulated period:
The appellants argued that the demands raised by the show cause notice dated 13.12.1990 for the period April 1980 to July 1990 were time-barred, as the department was fully aware of the facts. The Tribunal noted that an earlier show cause notice dated 3.7.1990 had been issued on the same facts, indicating that the department was aware of the details. Citing the case of Neyveli Lignite Corporation Ltd. v. CCE, the Tribunal held that the subsequent notice invoking a larger period was not sustainable, thus rendering the demands time-barred.

Conclusion:
The Tribunal allowed the appeals, setting aside the impugned order on the grounds of non-issue of show cause notice to DFI, incorrect classification of 'serpent eggs,' and time-barred demands.