2001 (12) TMI 160 - AT - Central Excise

Issues Involved:
1. Classification of goods manufactured by the appellants.
2. Applicability of Notification No. 67/95 for exemption.
3. Time-limit for demand of duty.
4. Imposition of penalty.

Issue-wise Detailed Analysis:

1. Classification of Goods:
The primary issue in this appeal is the classification of goods manufactured by the appellants, specifically whether the goods should be classified under Heading 84.37 of the Central Excise Tariff Act, attracting nil rate of duty, or under sub-heading 7207.10. The appellants manufacture C.I. chilled rolls using raw materials like pig iron, scrap of iron and steel, nickel, and ferro alloy, which are mixed and heated in a furnace, poured into moulds, and allowed to settle into specific shapes. The Deputy Commissioner, in the Adjudicating Order, confirmed the demand of duty and imposed a penalty, holding that C.I. castings fall under sub-heading 7207.10 and are not classifiable under Heading 84.37. The appellants argued that the castings have the essential character of the final product and should be classified under Chapter 84. The Tribunal, referring to the case of Shivaji Works Ltd. v. CCE, Aurangabad, held that the castings must lose the character of 'castings' and go beyond the casting stage to be considered as machine parts. Since the appellants did not provide evidence that the goods had lost the character of castings, the Tribunal upheld the classification under sub-heading 7207.10.

2. Applicability of Notification No. 67/95:
The appellants claimed the benefit of Notification No. 67/95 for the castings used captively in the manufacture of chilled rolls, which are exempted from duty under Notification No. 56/95. The Department argued that since the castings are not classifiable under Chapter 84, the benefit of Notification No. 67/95 is not available. The Tribunal agreed with the Department, stating that the issue before the adjudicating authority was whether the benefit of Notification No. 67/95 was available, and the classification of castings was not raised before the adjudicating authority. The Tribunal upheld the view that the impugned goods are castings and not machine parts, thereby disallowing the benefit of Notification No. 67/95.

3. Time-limit for Demand of Duty:
The appellants contended that part of the demand is hit by the time-limit as the show cause notice was issued on 27-9-1996 for demanding duty for the period January 1996 to 24-8-1996, which is beyond the 6 months' time-limit specified in Section 11A(1) of the Central Excise Act. The Tribunal agreed with this contention, noting that the demand should be confined to a period of 6 months preceding the date of issue of the show cause notice. The adjudicating authority was directed to re-determine the duty liability accordingly.

4. Imposition of Penalty:
The appellants argued that the penalty should not be imposed as the fact of manufacturing castings was fully within the knowledge of the Department. The Tribunal agreed with this argument, stating that the issue involved was one of interpretation involving classification, and the Department was aware of the manufacturing of castings by the appellants. Consequently, the penalty imposed on the appellants was set aside.

Conclusion:
The appeal was disposed of with the Tribunal upholding the classification of the goods under sub-heading 7207.10, disallowing the benefit of Notification No. 67/95, and directing the adjudicating authority to re-determine the duty liability for a period of 6 months preceding the date of the show cause notice. The penalty imposed on the appellants was set aside.

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