2001 (8) TMI 187 - AT - Central Excise

Summary

Issues Involved:

1. Denial of exemption under Notification No. 171/84 for copper wirebar moulds.
2. Classification of copper wirebar moulds as waste and scrap under sub-heading 7404.00.
3. Applicability of extended period of limitation under Section 11A of the Central Excise Act.
4. Applicability of Notification No. 217/86 for exemption.
5. Imposition of penalty and interest under Section 11AB of the Act.

Issue-wise Detailed Analysis:

1. Denial of Exemption under Notification No. 171/84:
The appellants, M/s. Hindustan Copper Ltd., were denied the benefit of exemption under Notification No. 171/84 for copper wirebar moulds. The Notification allows full exemption from Central Excise duty for wirebar moulds falling under Chapter 74, provided two conditions are met: (i) the moulds are used by a primary producer during the manufacture of copper and products thereof in the factory of production, and (ii) the moulds are melted either during or after such use in the said factory. The appellants did not fulfill the second condition as they cleared the wirebar moulds as waste and scrap to other customers instead of melting them within the factory.

2. Classification of Copper Wirebar Moulds:
The appellants classified copper wirebar moulds as waste and scrap under sub-heading 7404.00 and paid duty accordingly. However, the Department contended that the moulds should be classified under sub-heading 7419.91, which attracted a higher rate of duty. The appellants argued that their classification list, approved by the Department, classified the moulds as waste and scrap, and they paid duty based on this classification.

3. Applicability of Extended Period of Limitation:
The Department issued show cause notices (SCNs) beyond the standard six-month period, invoking the extended period of limitation under Section 11A of the Act due to alleged suppression of facts. The appellants contended that there was no suppression or intent to evade duty as they had filed the classification list, which was approved by the Department. The Tribunal held that the extended period of limitation was not applicable as there was no fraud, suppression, or wilful misstatement by the appellants. The SCNs were thus time-barred.

4. Applicability of Notification No. 217/86:
The appellants claimed the benefit of Notification No. 217/86, which exempts specified inputs used within the factory for manufacturing final products. The Department argued that the wirebar moulds did not qualify as "inputs" under this Notification as they were equipment or tools used in the manufacturing process. The Tribunal did not find substantial grounds to extend the benefit of this Notification to the appellants.

5. Imposition of Penalty and Interest:
The appellants argued that the penalty and interest imposed were not justified as there was no suppression of facts. The Tribunal noted that the Commissioner had observed that the appellants were under a bona fide belief regarding duty liability. Consequently, the allegation of suppression could not be sustained. Furthermore, interest under Section 11AB was not applicable retrospectively for the period before its insertion on 28-9-1996.

Conclusion:
The Tribunal allowed the appeals, setting aside the impugned orders. It held that the SCNs were time-barred and the extended period of limitation was not applicable. The interest and penalties imposed were also set aside.