2004 (3) TMI 64 - SC - Central Excise

Duty on cathodes and anodes demanded invoking the extended period of limitation Held that - As from the classification furnished by the assessee, it is evident that the Lead Anodes/Cast Anode Sheets mentioned in the classification List referred to mere Cast Lead Sheets. It did not include the impugned product, viz. Lead Anodes which comprised 2 distinct excisable goods, 1. Cast Lead Anode Header 2. Cast Lead Anode Sheets. In none of their classification Lists, the assessee had shown the product, Cast Lead Header/Anode Header, an integral part of Lead Anode, for approval. The material information regarding manufacture of lead Anodes Cast Lead Sheet Cast Lead Header and their captive use in the electrolysis process was never disclosed in the classification Lists which were approved by the Department not the fact intimated to the Department at any stage. On these facts we are in full agreement with the Commissioner that there was conscious withholding of information and thus the extended period of limitation had been rightly invoked. In this view of the matter, the Order of the Tribunal cannot be sustained. It is accordingly set aside. That brings us to the question as to whether the Respondents are liable to pay duty or the job workers are liable to pay duty. This would require looking into the facts and material. We therefore remit the matters back to the Tribunal who shall, after going into the facts and materials, decide the same.

Summary

Issues: Classification of manufactured products for duty payment, conscious withholding of information, liability of duty payment by manufacturer or job workers

In this case, the main issue revolves around the classification of manufactured products for the purpose of duty payment. The Respondents are engaged in manufacturing zinc, lead, and related products through electrolysis. The process involves creating electrodes by welding headers with sheets, which are essential for the electrolysis process. The Tribunal initially held that there was no manufacture as the headers were attached only to facilitate the use of the sheets. However, the Supreme Court disagreed, emphasizing that the sheets become electrodes only after undergoing the welding process, resulting in a new product with distinct characteristics. The Court highlighted that the headers are crucial for the sheets to function as electrodes, making them marketable products. The failure of the Tribunal to recognize this led to the overturning of its decision.

Another issue raised was the conscious withholding of information by the Respondents regarding the manufacturing process at their Visakhapatnam unit. The Commissioner found that the Respondents had willfully suppressed facts about the production of lead anodes, which resulted in the extended period of limitation being rightly invoked. The Supreme Court agreed with the Commissioner's assessment, stating that the deliberate concealment of material facts amounted to conscious withholding of information.

The final issue pertains to the liability of duty payment, whether it lies with the manufacturer (Respondents) or the job workers involved in the manufacturing process. The Court remitted this issue back to the Tribunal for further examination based on the facts and materials presented. The Tribunal was directed to determine the party responsible for duty payment after a thorough review of the case. Ultimately, the Supreme Court set aside the Tribunal's orders, allowing the appeals and emphasizing that there would be no order as to costs.