1989 (3) TMI 237 - AT - Central Excise

Summary

Issues Involved:
1. Classification of 'tie bars' under T.I. 26AA(i)(a) versus T.I. 68.
2. Whether the process of punching holes constitutes manufacturing.
3. Applicability of Notification No. 206/63 for duty exemption.
4. Validity of the demand for the past six months under Rule 11A of the Central Excises & Salt Act.

Detailed Analysis:

1. Classification of 'tie bars' under T.I. 26AA(i)(a) versus T.I. 68:
The appellants argued that the 'tie bars' should be classified under T.I. 26AA(i)(a) as forged products, asserting that no further duty was leviable. The lower authorities, however, classified 'tie bars' under T.I. 68, holding that the processes involved resulted in a new commodity with a distinct name and use. The Tribunal noted that the specifications and drawings provided by the railways did not describe the 'tie bars' as forged products. Instead, the tie bars were manufactured by rolling billets into flats and punching holes, indicating a new product distinct from the original material.

2. Whether the process of punching holes constitutes manufacturing:
The appellants cited a previous Tribunal decision (Aruna Steel Limited v. C.C.E., Madras) where punching holes was not considered a manufacturing process. However, the Tribunal found that the punching of holes in the flat product resulted in a new product with a specific functional role as railway track material. The Tribunal referred to authoritative definitions and concluded that mere punching does not constitute forging, and the tie bars could not be considered forged products.

3. Applicability of Notification No. 206/63 for duty exemption:
The appellants argued that the 'tie bars' should be exempt from further duty under Notification No. 206/63. The learned S.D.R. countered that the exemption was not applicable as the 'tie bars' moved away from the category of 'flat' after punching holes. The Tribunal agreed with the department, stating that the 'tie bars' acquired a new name, character, and use, and thus did not qualify for the exemption.

4. Validity of the demand for the past six months under Rule 11A of the Central Excises & Salt Act:
The appellants contended that no duty could be demanded retrospectively for the past period. The Tribunal, however, upheld the demand for the past six months, citing Section 11A of the Central Excises and Salt Act, 1944, which allows for such demands in cases of short levy or non-levy. The Tribunal referenced the Supreme Court's rulings in Nat Steel and C.C.E., Hyderabad v. Chemphar Drugs & Liniments, which supported the validity of the demand for a six-month period.

Conclusion:
The Tribunal dismissed the appeal, affirming the lower authorities' classification of 'tie bars' under T.I. 68 and the validity of the duty demand for the past six months. The processes involved in manufacturing the 'tie bars' resulted in a new product with distinct characteristics, and the exemption under Notification No. 206/63 was not applicable.