1988 (10) TMI 155 - AT - Central Excise

Summary

Issues Involved:
1. Classification of goods.
2. Applicability of time bar for duty demand.
3. Benefit of exemption for exported goods.
4. Imposition of penalty.

Summary:

1. Classification of Goods:
The primary issue was the classification of the goods described as "end fittings" or "nuts." The department alleged that these goods were commercially known and sold as nuts, which should be classified under Item 52-CET. The appellants contended that these nuts had a special function of facilitating the flow of oil under high pressure without leakage, and thus should not be classified merely as nuts. However, the Tribunal found that the essential character of these goods was fastening, and they did not have any independent function beyond that. Therefore, the Tribunal held that the goods were correctly classifiable under Item 52-CET.

2. Applicability of Time Bar for Duty Demand:
The appellants argued that the demand for duty was time-barred as the Show Cause Notice was issued beyond the normal period of six months. They claimed there was no suppression of facts or intent to evade duty. However, the Tribunal found that the appellants had mis-described the goods as "end fittings" instead of "nuts," which indicated a mala fide intention to evade duty. Consequently, the Tribunal upheld the department's demand for duty for an extended period of up to five years.

3. Benefit of Exemption for Exported Goods:
The appellants claimed that some of their goods were exported and thus should be excluded from the duty calculation under the relevant notification. The department did not deny this claim. The Tribunal agreed with the appellants, citing the decision in the case of International Minelmech Pvt. Ltd., and held that the value of goods actually exported should not be considered for duty computation. Therefore, the appellants were entitled to the benefit of exemption for the exported goods.

4. Imposition of Penalty:
The appellants argued against the imposition of a penalty of Rs. 1,00,000/-. The Tribunal, while upholding the imposition of the penalty, reduced the amount to Rs. 50,000/- considering the facts and circumstances of the case.

Final Order:
(a) The nuts are correctly classifiable under Item 52-CET.
(b) The duty may be demanded for a period up to 5 years.
(c) Appellants may be given due benefit of the quantum of goods which are shown to the department as having been exported.
(d) The penalty is reduced from Rs. 1,00,000/- to Rs. 50,000/- (Rupees fifty thousand only).