1991 (2) TMI 226 - AT - Central Excise

Summary

Issues Involved:
1. Whether the aluminium frames are excisable goods.
2. Whether the aluminium frames are marketable.
3. Whether the show-cause notice is hit by limitation.
4. Validity of the classification under Heading 8302.90.
5. Justification of the fine and penalty imposed.

Detailed Analysis:

1. Excisability of Aluminium Frames:
The appellants manufactured travel goods and intermediate products like aluminium frames by bending aluminium sections. The Department classified these frames under Heading 8307.00 and later under Heading 8302.90 of the Central Excise Tariff. The appellants contended that these frames were not excisable as they did not constitute "goods" due to their intermediate nature and lack of marketability. However, the Tribunal held that since the aluminium frames fall under specific tariff headings, they are considered excisable goods. The definition of "excisable goods" includes items specified in the Central Excise Tariff Act, making the frames subject to duty.

2. Marketability of Aluminium Frames:
The appellants argued that the frames were not marketable and were solely for captive consumption. They cited several case laws to support their claim that marketability is a crucial factor for determining excisability. However, the Tribunal concluded that the specific tariff entries for aluminium frames under Headings 8307.00 and 8302.90 render the question of marketability irrelevant. The frames, being covered under these headings, are inherently excisable regardless of their market presence.

3. Limitation and Show-Cause Notice:
The appellants claimed that the show-cause notice issued on 22-6-1987 for the period from 1-3-1986 to 27-12-1986 was barred by limitation as their manufacturing activities were known to the Department. The Tribunal referred to the Supreme Court's decision in Collector of Central Excise v. Chemphar Drugs and Liniments, which requires "something positive other than mere inaction or failure" to allege suppression. The Tribunal found no deliberate suppression by the appellants and restricted the demand to six months from the date of the show-cause notice. The second show-cause notice issued on 31-8-1989, which sought to reclassify the frames under Heading 8302.90, was not considered a continuation of the first notice and was also limited to six months.

4. Classification under Heading 8302.90:
The appellants contested the reclassification of aluminium frames under Heading 8302.90, arguing it was beyond the scope of the original show-cause notice. The Tribunal noted that the reclassification involved a change in the grounds, rate of duty, and amount of duty, which could not be considered a mere continuation of the earlier notice. Consequently, the demand based on the second show-cause notice was limited to six months from its date.

5. Fine and Penalty:
The appellants challenged the penalty of Rs. 5 lakhs imposed by the Collector. The Tribunal, considering the absence of suppression, ruled that confiscation was not justified. Consequently, the fine and penalty were set aside.

Conclusion:
The appeal was disposed of with consequential reliefs. The Tribunal held that the aluminium frames are excisable goods under the specific tariff headings, rendering marketability irrelevant. The demand for duty was restricted to six months from the dates of the respective show-cause notices due to the absence of suppression. The fine and penalty imposed were set aside.