1987 (7) TMI 234 - AT - Central Excise

Summary

Issues Involved:
1. Eligibility of nickel catalyst, bleaching activated earth, and activated carbon for the benefit of Notification No. 201/79-CE.
2. Timeliness of the demand raised by the Revenue against the appellants.

Detailed Analysis:

1. Eligibility of Nickel Catalyst, Bleaching Activated Earth, and Activated Carbon for Notification No. 201/79-CE:

The main question in these appeals is whether the nickel catalyst, bleaching activated earth, and activated carbon used by the appellants in manufacturing vegetable products are entitled to the benefit of Notification No. 201/79-CE. The notification exempts excisable goods if they are used as raw materials or component parts of other excisable goods.

The Asstt. Collector held that the nickel catalyst is a cleaning agent and not a raw material for producing vegetable products under the said Notification. This view was upheld by the Collector, Central Excise (Appeals), who also ruled that the demand for credit availed more than six months prior to the show cause notice is time-barred.

The appellants argued that the catalyst should be considered eligible for the notification's benefit, citing several CEGAT decisions. They contended that inputs need not form part of the final product to qualify. However, the Tribunal noted that the cases cited did not specifically address nickel catalyst.

The Tribunal emphasized that the notification exempts goods used as raw materials or component parts. The essential conditions include that the goods should be excisable, duty should be leviable, inputs should fall under Item No. 68 CET, and inputs should be used as raw materials or components parts.

The Tribunal concluded that the nickel catalyst is used as a cleaning agent and does not remain in the final product, thus it cannot be considered a raw material. The Law Lexicon defines raw material as material from which a final product is made, which the catalyst does not meet.

Regarding whether the catalyst is a component part, the Tribunal referred to definitions indicating that a component part contributes to the composition of a whole. Since the nickel catalyst is not present in the final product, it is not a component part.

Consequently, the Tribunal held that nickel catalyst, bleaching activated earth, and activated carbon are not eligible for the benefit of Notification No. 201/79-CE as they are neither raw materials nor component parts.

2. Timeliness of the Demand Raised by the Revenue:

The second issue is whether the demand raised by the Revenue is time-barred. The appellants argued that Section 11A of the Central Excises and Salt Act applied, which prescribes a six-month limitation period. The Revenue contended that the notification allows recovery of amounts without a time limit, making Section 11A inapplicable.

The Tribunal noted that the demand-cum-show-cause notice invoked Section 11A, and the Asstt. Collector's order confirmed the demand under this section. The Tribunal held that the Revenue cannot now argue that the demand was made under a different provision. Thus, the Tribunal upheld the Appellate Collector's decision that part of the demand was time-barred.

Conclusion:

The Tribunal concluded that:
- Nickel catalyst, bleaching activated earth, and activated carbon are not entitled to the benefit of Notification No. 201/79-CE.
- The Collector of Central Excise (Appeals) was correct in holding that part of the demand was time-barred.

The three appeals were disposed of accordingly.