1987 (6) TMI 324 - AT - Central Excise

Summary

Issues: Classification of manufactured articles under Central Excise Tariff (CET) and applicability of duty and penalty.

In this case, the jurisdictional Superintendent found that the appellants had manufactured articles described as side cutter knives, front cutter knives, and scrap cutting punches without the proper Central Excise license. The Superintendent believed these articles fell under TI 51-A(iv) CET, leading to a show cause notice for contravention of statutory provisions. The Assistant Collector classified the articles under TI 61-A(iv) CET, demanding duty payment on the manufactured items. The Assistant Collector also ordered confiscation of stock and imposed a penalty, which was partially set aside on appeal. The appellants, through a revision petition, brought the matter to the Central Government and subsequently to the Tribunal for appeal.

The key issue revolved around the classification of the products. The department argued that the articles were industrial knives under 7151-A(iv) CET, suitable for metal cutting. In contrast, the appellants contended that the items were die inserts and scrap cutting punches used in an assembly of blanking press tools, falling under TI 51-A(iii) CET. The Assistant Collector acknowledged the purpose of cutting but questioned whether the items still qualified as industrial knives due to their use in a die for metal operations.

The Tribunal referred to a previous decision involving die inserts and punches, where items performing metal cutting functions were classified under TI 51-A(iii) CET. Drawing parallels, the Tribunal held that the items in question, despite being termed as knives, were functionally similar to the die inserts in the precedent case and should be classified under TI 51-A(iii) CET.

Additionally, the appellants invoked Notification No. 321/77-C.E., claiming exemption from excise duty if the goods were captively consumed within the production factory. While the show cause notice acknowledged captive consumption of 13 items, the lower authorities did not address whether the entire production was captively consumed. Consequently, the Tribunal allowed the appeal, setting aside the lower authorities' orders and remitting the matter to the Assistant Collector for quantification of any duty payable under TI 51-A(iii) CET.