2004 (3) TMI 177 - AT - Central Excise

Summary

Issues:
1. Classification of motor vehicles under different headings.
2. Exemption under Notification No. 5/98-C.E. and Notification No. 89/95-C.E.
3. Demand of duty on scrap.
4. Imposition of penalties under Section 11AC and Rule 173Q.

Classification of motor vehicles under different headings:
The appellants were engaged in manufacturing bodies on duty-paid chassis of motor vehicles and classified them under various headings of the CETA Schedule. The department issued show cause notices contesting the classification and proposing to classify all motor vehicles under a different heading. The notices alleged misclassification to evade duty payment and demanded duty for the relevant period. The adjudicating authority vacated the duty demand on motor vehicles but confirmed it on scrap. Penalties were imposed on the party for the duty demand.

Exemption under Notification No. 5/98-C.E. and Notification No. 89/95-C.E.:
The appellants claimed exemption under Notification No. 5/98-C.E. for motor vehicles and under Notification No. 89/95-C.E. for scrap. The notification exempted scrap arising from the manufacture of exempted goods, but a proviso excluded scrap cleared from a factory where dutiable goods were also manufactured. The expression "exempted goods" was defined to include goods exempted under specific notifications. The Tribunal held that the scrap did not qualify for exemption as dutiable products were also manufactured in the factory, making the scrap liable for duty.

Demand of duty on scrap:
The Tribunal upheld the demand of duty on scrap cleared by the appellants during the relevant period as it fell under the proviso of Notification No. 89/95-C.E. The extended period of limitation was justified due to alleged suppression of facts. The duty demand on scrap was upheld as the appellants failed to challenge it effectively.

Imposition of penalties under Section 11AC and Rule 173Q:
The Commissioner imposed penalties on the party for suppression of information regarding scrap clearance. However, the Tribunal found that the show cause notices did not specifically allege suppression of such information. Therefore, the penalties were set aside as they were beyond the scope of the notices.

In conclusion, the Tribunal modified the impugned order by upholding the duty demand on scrap but setting aside the penalties imposed on the party. The appeals were disposed of accordingly.