2002 (2) TMI 176 - AT - Central Excise

Summary

Issues:
1. Central Excise Duty evasion by manufacturing and removing 'Cotton Sewing Thread' and 'Polyester Sewing Thread' without registration and payment of duty.
2. Imposition of penalty, confiscation of goods, and machinery under Rule 209A.
3. Confiscation and release of Polyester Sewing Thread under seizure.
4. Admissibility of Modvat credit claim.
5. Re-determination of assessable value and quantification of duty.
6. Consideration of duty as cum duty price.
7. Remand for de novo quantification of duty demands and penalty reconsideration.

Detailed Analysis:
1. The appellants were issued a show cause notice for evading Central Excise Duty by manufacturing and removing 'Cotton Sewing Thread' and 'Polyester Sewing Thread' without registration and payment of duty. The Commissioner concluded that the appellants were liable to pay the entire Central Excise Duty demanded under Section 11A(i) of the Central Excise Act, 1944. Penalty and confiscation of goods and machinery were also imposed under Rule 209A.

2. The Commissioner confiscated Polyester Sewing Thread under seizure and ordered its release on payment of a fine after approximating the duty. Additionally, a penalty of Rs. 10 lakhs was imposed on the appellants, and plant & machinery were ordered to be confiscated under Rule 173Q, redeemable on payment of a fine.

3. The Tribunal considered the submissions of the appellant and the Revenue. The appellant's manufacturing process involved dyeing, rewinding, and other activities resulting in the production of 'Sewing Thread.' The Tribunal found that the goods manufactured by the appellants qualified as 'Sewing Thread' under the Tariff, and duty should be levied accordingly. The Tribunal relied on the decision in the case of Laminated Packaging to support its conclusion.

4. The Tribunal ordered a re-determination of the assessable value and quantification of duty based on previous decisions and directed the Adjudicator to consider the Modvat credit claim. The Tribunal emphasized the importance of considering the price realized as cum duty price for calculating Excise Duty.

5. Considering the decisions in relevant cases, the Tribunal set aside the penalty and ordered a re-evaluation of the penalty amount based on the revised duty demands. The Tribunal remanded the matter for de novo quantification of duty demands and reconsideration of the penalty in light of the revised duty amounts.

6. In conclusion, the Tribunal allowed the appeals for remand in the specified terms, emphasizing the need for re-evaluation of duty demands, consideration of Modvat credit claim, and reassessment of penalty amounts based on the revised duty calculations.