2008 (8) TMI 117 - AT - Central Excise

Oxygen lancing pipes - it has come as result of several processes undertaken on HR sheets, strips, coils or steel tubes - bringing oxygen lance pipes into existence amounts to manufacture as it has acquired a new name and has entirely a different character and is meant for a use different from the use of steel pipes - hold that, this is a new product liable for excise duty u/ch 7306 - not eligible for the exemption Notification No. 202 of 2008 larger period invokable - demand not time barred

Summary

Issues:
1. Whether the appellant's activities amount to manufacture for excise duty purposes.
2. Whether the demand of duty and penalty imposed by the Commissioner is justified.
3. Whether the appellant is eligible for exemption under Notification No. 202/88.
4. Whether the extended time limit for demand of duty is applicable.
5. Whether the penalty imposed should be reduced.

Analysis:
1. The appellant, engaged in manufacturing 'Oxygen lancing pipes,' sought clarification on whether their activities constitute manufacture. The Department confirmed the product as excisable. The appellant failed to cooperate during investigations and failed to provide evidence supporting their claims before the Commissioner. The Tribunal remitted the matter for reconsideration due to fundamental disputes. The Tribunal found that the oxygen lance pipes, a specialized product, underwent processes that transformed them into a new excisable product, distinct from the starting materials. The Tribunal upheld the duty demand.

2. The appellant argued that their activities did not amount to manufacture before a specific date and that the new product did not emerge, thus should not be excisable. They also claimed eligibility for exemption under Notification No. 202/88. However, the Tribunal found that the appellant failed to prove compliance with the notification's conditions, including dimensions and duty paid inputs. The Tribunal held that the explanation deeming inputs as duty paid was a one-time relaxation and not applicable to all inputs procured over the years.

3. The Tribunal addressed the issue of the extended time limit for demand of duty, noting that the appellant had not registered with excise authorities during the relevant period and had not followed excise procedures. The Tribunal found that the appellant's doubt regarding duty liability after a budget introduction did not justify their past non-compliance. The extended time limit was deemed correctly invoked.

4. Considering the circumstances, the Tribunal reduced the penalty imposed, showing leniency due to the pre-11AC period. The duty demand was upheld, the appellant was deemed ineligible for the exemption, and the penalty was reduced from Rs. 73,60,631 to Rs. 30,00,000. The appeal was disposed of accordingly on 13-8-2008.