2018 (1) TMI 359 - AT - Central Excise

Valuation - Glass Tubes - captive consumption - N/N. 6/2002-CE dated 01.03.2002 - Held that - there is enough evidence on record to establish that prior to the date of purchase of the compressor, the Mouth Blowing process was being used by the assessee for conversion of glass into Glass Tubes - the crux of the issue relates to the date of purchase of compressor. Admittedly, the appellant has produced a bill dated 31.03.2007 issued by Rathi Industries, showing the sale purchase of the compressor. The adjudicating authority has simpliciter dismissed the same on the ground that the same was purchased on the last date of the financial year and as such, was manipulated. However, we find that the above observations of the adjudicating authority are in the realm of assumptions and presumptions and not based upon any evidence so as to hold contrary to the appellants claim. Revenue has not bothered to investigate at the end of the seller of the compressor so as to find out the fact as to whether the compressor was actually sold on the said date or not. As regards the manufacture of the Glass Tubes with effect from 01.04.2007 with the help of the compressor learned Advocate agrees that the same would be dutiable inasmuch as the same were being used captively for the manufacture of the exempted final products - For verification of the appellants said claim, which is dependent upon the computation of the clearances in a financial year, we remand the matter to the adjudicating authority to examine these facts. Penalty set aside - part matter on remand - appeal disposed off.

Issues:
1. Duty liability on Glass Tubes used in the manufacture of Glass Beads.
2. Allegation of non-payment of duty and initiation of proceedings.
3. Claim of exemption under Notification No.6/2002-CE.
4. Dispute regarding the manufacturing process of Glass Tubes.
5. Rejection of appellant's contentions by the Adjudicating Authority.
6. Evidence supporting the use of Mouth Blowing process.
7. Dismissal of appellant's evidence by the Adjudicating Authority.
8. Dispute over the date of purchase of compressor.
9. Remand of the matter for verification of SSI Exemption claim.
10. Setting aside of penalties imposed on the appellants.

Analysis:
The judgment revolves around the duty liability on Glass Tubes used in the manufacture of Glass Beads, which were claimed to be exempted from duty. The appellant argued that Glass Tubes were manufactured using the Mouth Blowing process, exempted under Notification No.6/2002-CE. However, a visit by Central Excise officers revealed the use of a compressor, leading to a demand for duty payment. The Adjudicating Authority rejected the appellant's claims, citing lack of evidence and manipulation in the purchase date of the compressor.

Evidence presented by the appellant, including employee statements and a labor suit, supported the use of the Mouth Blowing process before the compressor's purchase. The Tribunal found the Adjudicating Authority's dismissal of this evidence unjustified, emphasizing the lack of investigation into the compressor's purchase date. Consequently, the Tribunal accepted the appellant's contention that the Mouth Blowing process was used before 01.04.2007, entitling them to exemption under the notification.

Regarding Glass Tubes manufactured post-compressor purchase, the Tribunal remanded the matter to verify the appellant's claim for Small Scale Industry (SSI) Exemption. The penalties imposed on the appellants were set aside based on the findings. The judgment highlights the importance of substantiated evidence in duty liability disputes and the need for thorough investigation before rejecting claims.

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