2005 (12) TMI 21 - AT - Central Excise

Central Excise Glow sign (1) Excisability and Classification (2) Natural justice (3) Adjudication (4) Limitation (5) Demand

Summary

Issues:
Manufacture of glow signs without payment of duty; Classification of goods under Chapter Heading 94.05; Valuation of goods; Extended period of limitation; Imposition of penalty under Section 11A.

Manufacture of Glow Signs without Payment of Duty:
The case involves M/s. Tanzeem Screen Arts (TSA) being accused of manufacturing glow signs falling under Chapter Heading 94.05 and clearing them without payment of duty. The Commissioner held that TSA manufactured glow signs either completely fitted or in dismantled condition to be fitted at site. The Commissioner relied on statements from TSA's customers and concluded that TSA indeed manufactured glow signs classifiable under Chapter Heading 94.05. The Commissioner rejected TSA's argument that they did not manufacture the Tin/Aluminium box in which the printed sheet is fitted and therefore did not manufacture the glow sign. The Commissioner's decision was influenced by previous court judgments regarding assembly of items at site constituting manufacturing.

Classification of Goods under Chapter Heading 94.05:
The Tribunal noted that various customers of TSA confirmed placing orders for glow signs and that TSA supplied the finished goods either completely fitted or in dismantled condition. The Tribunal observed that TSA outsourced some parts of the glow signs and supplied all parts after fitting them. The Tribunal agreed with the Commissioner that TSA's activity constituted the manufacture of glow signs falling under Chapter Heading 94.05, as evidenced by billing and payment received for the glow signs.

Valuation of Goods:
TSA disputed the valuation arrived at by the Commissioner, arguing for a lower payable amount. However, the Tribunal found that the Commissioner did not act behind TSA's back in determining the revised value. The Commissioner asked investigating officers to re-scrutinize figures mentioned in the show cause notice annexures to quantify the demand. The Tribunal rejected TSA's attempt to raise fresh valuation issues.

Extended Period of Limitation:
TSA contended that the extended period of limitation was not applicable, claiming a bona fide belief that they were not manufacturing excisable goods other than printed plastic sheets. However, the Tribunal disagreed, stating that TSA failed to disclose crucial information to the Department regarding the manufacturing and supply of glow signs, making the extended period of limitation applicable.

Imposition of Penalty under Section 11A:
The Commissioner imposed a penalty under Section 11A, which TSA argued against, claiming it was not a case warranting the maximum penalty. The Tribunal agreed and reduced the penalty to Rs. 50,000, confirming the duty demand and upholding the Commissioner's order with modifications.

In conclusion, the Tribunal partially allowed the appeal, confirming the duty demand, invoking the extended period of limitation, reducing the penalty, and upholding the Commissioner's order with modifications.