2016 (11) TMI 821 - AT - Central Excise

SSI exemption - benefit of N/N. 1/93 cit. 28.02.1993 - whether the appellants can exercise option in respect of one item manufactured by them and pay full duty while availing the concessional duty on the other item manufactured by them? - Held that - a manufacturer has the option of not availing the benefit of the said exemption and to pay duty at the normal rate. Having done so, duty has to be paid on all their subsequent clearances at the normal rate in that particular financial year. Accordingly, once the appellants had exercised the option in respect of waste & scrap and paid full duty liability in respect of waste & scrap, their subsequent clearances were not eligible for partial exemption in terms of Notification 1/93 ibid. The appellants have attempted to create an artificial regime as if they are manufacturing two distinct products, one dutiable and other exempted, while is not the case. Waste and scrap have arisen in an integrated process of manufacture of patta/patti and scrap has arisen only as by product. Subsequent clearance therefore includes clearance of both patta/patti as well as the waste scrap Appeals dismissed.

Summary

Issues:
1. Whether the appellants can pay full duty on one item while availing concessional duty on another item they manufacture.
2. Whether the demands raised against the appellants are time-barred.

Analysis:
Issue 1:
The main issue in this case was whether the appellants could exercise the option to pay full duty on one item while availing concessional duty on another item they manufactured. The appellants were engaged in the manufacture of S.S. Patta/Patti, Circles, and Waste Scrap falling under the Central Excise Tariff Act, 1985. The Notification No. 1/93 allowed manufacturers to choose not to avail of the exemption and pay duty at the normal rate. Once the appellants exercised this option for waste scrap and paid full duty, subsequent clearances were not eligible for partial exemption under the notification. The Tribunal found that the waste and scrap were integral to the manufacturing process of patta/patti and circles, and subsequent clearance included both categories. Therefore, the attempt to treat them as distinct products for duty purposes was not valid.

Issue 2:
The appellants argued that the demands raised against them were time-barred and should be prospective due to the approval of their classification list by the department. However, the department had not accepted the classification list, leading to ongoing litigation. The Commissioner (Appeals) rightly upheld the demands as not time-barred, as both show cause notices were issued within the prescribed time limit under Section 11A of the Central Excise Rules, 1944. Additionally, the case laws cited by the appellants were found not to be applicable to the current issue at hand, further supporting the dismissal of the appeals.

In conclusion, the Tribunal dismissed the appeals based on the findings that the appellants could not selectively avail of concessional duty rates and that the demands were not time-barred, as the show cause notices were issued within the statutory time limits. The case laws cited were deemed irrelevant to the specific circumstances of this case, leading to the dismissal of the appeals.