2018 (11) TMI 968 - AT - Central Excise

Intermediate goods - brass billets/rods - whether the intermediate goods i.e. brass billets/ rods is liable to excise duty or not? - benefit of N/N. 67/95-CE dated 16.03.1995 - Time Limitation - Held that - In the facts of the present case, firstly, the so called intermediate product is not in coil form and also the product does not have uniform solid cross section along their whole length in the shape of circles, ovals, rectangles. The extruded product in the present case is having uneven cross section and therefore, there is no emergence of rods during the course of manufacture of wire. As per definition of wire given in the Chapter 74, the wire should always be in coil form. In the present case, after extrusion, the product gets converted into coil form. Hence, the product which emerged after extrusion process is wire in coil form and no any other intermediate product emerged in the course of manufacture of wire. The product on which the lower authorities have demanded duty does not emerge as an intermediate product during the course of manufacture of brass wire. Therefore, there is no question of demanding duty. Exemption under N/N. 67/95-CE dated 16.03.1995 in respect of the intermediate goods brass billets/rods - Held that - In the present case, the goods manufactured by the appellant are cleared under exemption and no Cenvat credit on the inputs used in the said manufactured goods was availed, the obligation as per Rule 6(1) has been discharged by the appellant. Therefore, on the intermediate product i.e. brass billets/ rods, the Notification No. 67/95-CE dated 16.03.1995, in the appellant s case is clearly available to them. Time limitation - Held that - The emergence of intermediate product, if any, was in view of the department and was not suppressed by the appellant. The appellant having filed the classification list and declaration wherein they have claimed the exemption and from the declaration, it can be easily found out that what is the goods manufactured and therefore, if any intermediate product emerged, can be known by the departmental officers - there is no reason to allege suppression of facts on the part of the appellant - demand is hit by limitation for the extended period. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Whether the intermediate goods (brass billets/rods) are liable to excise duty.
2. Applicability of Notification No. 67/95-CE for exemption on intermediate goods.
3. Whether the demand is hit by limitation due to non-suppression of facts by the appellant.

Issue-wise Detailed Analysis:

1. Liability of Intermediate Goods to Excise Duty:
The appellant argued that the intermediate goods (brass billets/rods) emerged during the manufacturing process of brass wires are not excisable. They contended that these goods are not marketable as they are used in a continuous and uninterrupted manner in a red-hot condition and do not attain a status of marketable goods. The department, however, claimed that these intermediate goods are rods and are excisable. The Tribunal found that the intermediate product does not have a uniform solid cross-section along its whole length, as required by the definition of rods under Chapter 74 of the Central Excise Tariff Act. Therefore, the intermediate product is not considered rods and is not excisable. The Tribunal concluded that the demand for excise duty on these intermediate goods is not sustainable.

2. Applicability of Notification No. 67/95-CE:
The appellant claimed exemption under Notification No. 67/95-CE for the intermediate goods. The Tribunal noted that the exemption is available if the manufacturer does not avail of Cenvat credit on inputs used in the manufacture of exempted goods. The appellant did not take Cenvat credit on the brass scrap received from the principal, thus fulfilling the obligation under Rule 6(1) of the Cenvat Credit Rules. The Tribunal referred to previous judgments which supported the appellant’s claim for exemption under Notification No. 67/95-CE, concluding that the intermediate goods are eligible for exemption.

3. Limitation and Non-suppression of Facts:
The appellant argued that the demand is hit by limitation as all relevant details were within the knowledge of the department. The Tribunal found that the appellant had filed classification lists and declarations, and the department was aware of the manufacturing process and the emergence of intermediate products. Therefore, there was no suppression of facts or mis-declaration by the appellant. Consequently, the demand for the extended period is not justified.

Conclusion:
The Tribunal held that the intermediate goods are not excisable, the appellant is eligible for exemption under Notification No. 67/95-CE, and the demand is hit by limitation due to the absence of suppression of facts. The impugned order was set aside, and the appeal was allowed.