2000 (7) TMI 158 - AT - Central Excise

Issues:
- Confirmation of duty against the appellant-firm and imposition of penalty
- Whether emptying of drums amounts to manufacture and attracts duty
- Applicability of Modvat credit on containers emptied of their contents
- Invocation of longer period of limitation for show cause notice
- Justification for personal penalties and interest under Section 11AB
- Appeal by Revenue regarding quantification of duty demand

Confirmation of Duty and Penalty:
The judgment involved appeals arising from a common impugned order confirming duty of Rs. 6,95,736 against the appellant-firm, M/s. Usha Beltron Limited, and imposing penalties on individuals associated with the firm. The Commissioner of Central Excise confirmed the duty on the ground that emptying drums during the manufacturing process amounted to manufacturing the drums themselves. However, the appellant argued that this reasoning was erroneous, citing a Tribunal decision in a similar case where emptying drums did not constitute manufacturing. The Tribunal agreed with this argument and set aside the impugned order, allowing the appeals filed by the appellant-firm.

Applicability of Modvat Credit:
The issue revolved around whether the appellants were liable to pay duty on containers emptied of their contents or reverse the Modvat credit taken on the value of the containers. The Revenue contended that since the appellants only used the compound and not the containers, duty should be paid on the containers or Modvat credit reversed. However, the Tribunal held that the appellants could not be considered manufacturers of the containers merely by emptying them, especially if the containers were durable and repeatedly used. The Tribunal emphasized that the duty must have been paid by the manufacturers of the containers at the time of clearance, and the appellants, who took Modvat credit on the compound, were not liable to pay duty on the containers. Therefore, the Tribunal set aside the impugned order and allowed the appeals filed by the appellant-firm.

Invocation of Longer Period of Limitation:
The appellant argued that the show cause notice issued for the period from March 1991 to January 1996 was barred by a limitation of six months. The appellant contended that none of the conditions for invoking the longer period of limitation were satisfied, as they had been engaging in the activities for several years with regular compliance. The Tribunal agreed with the appellant, stating that the longer period was not justified, and set aside the personal penalties imposed.

Justification for Penalties and Interest:
The appellant challenged the personal penalties imposed on the appellant-firm's Managing Director and Vice-President, along with the confirmation of interest under Section 11AB. The appellant argued that the penalties and interest were not justified, citing settled issues and decisions. The Tribunal agreed with the appellant, setting aside the penalties and interest imposed.

Revenue's Appeal on Quantification of Duty Demand:
The Revenue's appeal focused on two grounds related to the quantification of duty demand. The Revenue contested the deduction of Central Excise Duty demanded for determining the assessable value of containers and the application of Notification No. 181/88-C.E. The Tribunal rejected the Revenue's appeal, stating that the issues were covered by previous decisions, and upheld the quantification of duty based on the effective rate mentioned in the notification.

In conclusion, the Tribunal set aside the impugned order, allowed the appeals filed by the appellant-firm, rejected the Revenue's appeal, and made decisions on personal penalties, interest, and the invocation of the longer period of limitation.

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