2001 (5) TMI 77 - AT - Central Excise

Summary

Issues:
1. Appeal against Order-in-Original confirming demand under Section 11A of the Central Excise Act and imposing a penalty.
2. Appeal by Revenue against confirmation of a lesser demand amount based on a Tribunal decision.
3. Assessment of percentage of fly ash in the manufacture of asbestos cement pipes and couplings for availing duty exemption.

Analysis:

1. The judgment pertains to an appeal filed by the assessee against Order-in-Original confirming a demand under Section 11A of the Central Excise Act and imposing a penalty. The Commissioner confirmed a demand of Rs. 16,15,885/- and imposed a penalty of Rs. 5,00,000/- invoking Rule 173Q of the Central Excise Rules, 1944. The assessee challenged this order, leading to the appeal E/2009/2000-D.

2. The Revenue filed an appeal E/373/2001-D against the Commissioner's decision to confirm a demand for a lesser amount based on a Tribunal decision in Srichakra Tyres Ltd. v. Collector of Central Excise. The Tribunal upheld the Commissioner's decision, citing the binding nature of the earlier Tribunal decision. Consequently, the appeal filed by the Revenue was dismissed.

3. The main issue in the assessee's appeal E/2009/2000-D was the assessment of the percentage of fly ash used in the manufacture of asbestos cement pipes and couplings for availing duty exemption. The dispute arose from the Department's show cause notice demanding duty based on the percentage of fly ash used. The manufacturer contended that the water content in the finished product should not be considered for determining the percentage of fly ash. The Tribunal analyzed the relevant notifications and previous decisions to determine that the percentage of fly ash should be assessed based on the weight of the finished product in dry condition at the time of clearance.

4. The Tribunal clarified that goods eligible for duty exemption should be at the stage of clearance from the factory and should not contain water. It emphasized that the weight of the finished product in dry condition should be considered for calculating the percentage of fly ash used, as per CBEC Circular No. 477/43/99-CX. The Tribunal rejected the Department's argument that the weight of wet pipes should be considered, citing a previous decision that was not applicable to the current case.

5. Ultimately, the Tribunal set aside the Commissioner's order, noting that the total production of pipes, as per the RG-I register, had around 25% fly ash content. The appeal was allowed with consequential reliefs, if any, in favor of the assessee. The judgment provided a detailed analysis of the legal and factual aspects involved in the assessment of duty exemption eligibility based on the percentage of fly ash used in the manufacturing process of asbestos cement pipes and couplings.