2000 (10) TMI 152 - AT - Central Excise

Summary

Issues Involved:
1. Marketability and excisability of Aluminium Wire Rods.
2. Limitation for issuing demand notices.
3. Justification for penalties imposed on the appellant firm and its directors/managers.

Detailed Analysis:

1. Marketability and Excisability of Aluminium Wire Rods:

The appellants manufacture Aluminium Conductors (A.A.C.), Aluminium Conductor Steel Reinforced (A.C.S.R.), and single wires. They convert Aluminium Ingots into Wire Rods, which are then drawn into wires. The appellants argued that these Wire Rods, which are 15' to 25' long, are not marketable due to their short length, making them non-excisable despite being listed in the Central Excise Tariff. They supported this claim with certificates from M/s. BALCO and M/s. NALCO stating that such short Wire Rods are not commercially viable for wire drawing.

The Revenue contended that marketability is determined by the capability of the product to be marketed, not by actual marketing. The fact that the appellants used these Wire Rods and had them manufactured by job workers indicates their marketability. The Tribunal agreed with the Revenue, citing the Supreme Court's ruling that marketability is a question of fact and goods are excisable if they are capable of being marketed. The Tribunal found that the Wire Rods, despite their short length, are marketable and thus excisable, as evidenced by their use and the job workers' involvement.

2. Limitation for Issuing Demand Notices:

The appellants contested the demand on the grounds of limitation, arguing that all show cause notices were issued beyond the normal six-month period. They highlighted a letter dated 28-10-1989 to the Assistant Commissioner of Central Excise, Dhanbad, informing about the conversion of imported Aluminium Ingots into Wire Rods for manufacturing AAC/ACSR Conductors. They claimed this should have alerted the Revenue about their activities.

The Revenue countered that the appellants did not file any classification lists or maintain records for the Wire Rods, and their bona fide belief was unsupported. The Tribunal found that the appellants' letter did not disclose that the Wire Rods would be used to manufacture duty-exempt Aluminium Wires. The Tribunal upheld the longer limitation period, agreeing with the adjudicating authority that the appellants suppressed material facts.

3. Justification for Penalties Imposed on the Appellant Firm and its Directors/Managers:

The adjudicating authority imposed a personal penalty of Rs. 9.25 lakh on the appellant firm and additional penalties on the directors and manager under Rule 209A of the Central Excise Rules, 1944.

The Tribunal confirmed the demand of Rs. 9,24,818.54 but reduced the penalty on the appellant firm to Rs. 5 lakh, considering the overall circumstances. The Tribunal found no justification for separate penalties on the directors and manager, setting aside the penalties imposed on them.

Conclusion:

The Tribunal confirmed the duty demand and reduced the penalty on the appellant firm to Rs. 5 lakh. It set aside the penalties on the directors and manager, allowing their appeals. The key findings were that the Aluminium Wire Rods were marketable and excisable, the longer limitation period was applicable due to suppression of facts, and separate penalties on the directors and manager were unwarranted.