2005 (3) TMI 334 - AT - Central Excise

Summary

Issues:
1. Whether the appellants are required to pay duty amount and penalty for the manufacture and sale of Corex Gas at Nil rate of duty under Rule 6(3)(b) of the Cenvat Rules.
2. Whether the demands raised by the Revenue are barred by time.
3. Whether the appellants have a strong case in their favor based on technological necessity and previous judgments.

Analysis:

1. The appellants were required to pre-deposit a substantial duty amount and penalty for the manufacture and sale of Corex Gas at Nil rate of duty. The Revenue contended that 8% duty should be paid on the total price of Corex Gas under Rule 6(3)(b) of the Cenvat Rules. However, the appellants argued that the creation of Corex Gas as a by-product due to technological necessity does not warrant the imposition of additional duty. They cited various judgments to support their stance, emphasizing that the presence of a by-product does not automatically trigger duty payment. The Tribunal found merit in the appellants' argument and granted a waiver of pre-deposit and stay of recovery, allowing the appeal to proceed for final hearing within 180 days.

2. The appellants raised a procedural issue regarding the time bar on the demands raised by the Revenue. The demands were issued after a significant lapse of time from the period in question (1-3-2002 to 31-3-2003). The appellants maintained proper records, did not suppress any facts, and actively participated in the proceedings. Despite these factors, the Commissioner did not consider the citations provided by the appellants or the remand of a similar case to the original authority for reevaluation. This procedural oversight was noted by the Tribunal in its decision.

3. The Tribunal, after careful consideration, acknowledged that the creation of Corex Gas was indeed a technological necessity resulting in a by-product. Relying on previous judgments and the arguments presented by the appellants, the Tribunal found that the availment of Modvat credit by the appellants appeared to be correct. The Tribunal deemed the appellants' case to be strong and granted an unconditional stay of recovery and waiver of pre-deposit. The matter was scheduled for final hearing on a specific date, with both parties instructed to exchange their written submissions beforehand. The Tribunal emphasized the need for a prompt resolution of the appeal, indicating a positive intent to dispose of the matter efficiently.

In conclusion, the Tribunal's judgment favored the appellants based on the technological necessity argument and the lack of justification for imposing additional duty on the manufacture and sale of Corex Gas at Nil rate of duty. The procedural concerns raised by the appellants regarding the time bar on the demands were also acknowledged, highlighting the importance of fair consideration and adherence to legal procedures in such cases.