1991 (4) TMI 225 - AT - Central Excise

Summary

Issues Involved:
1. Demand of excise duty on Plaster of Paris used in manufacturing moulds.
2. Marketability and classification of Plaster of Paris moulds.
3. Applicability of Notifications No. 217/86 and 221/86.
4. Limitation period for issuing demand-cum-show cause notices.

Issue-wise Detailed Analysis:

1. Demand of Excise Duty on Plaster of Paris Used in Manufacturing Moulds:
The Additional Collector of Central Excise, Faridabad, demanded excise duty amounting to Rs. 4,15,387.35 from the appellant under Section 11A of the Central Excises & Salt Act, 1944, on Plaster of Paris manufactured and captively used in the manufacture of plaster of paris moulds. The Department contended that since the moulds are exempt from excise duty under Notification No. 221/86, the benefit of Notification No. 217/86 is not admissible to Plaster of Paris used in making these moulds.

2. Marketability and Classification of Plaster of Paris Moulds:
The Department argued that Plaster of Paris moulds are "goods" and are marketable, as evidenced by the precise shapes and sizes of the sanitaryware manufactured using these moulds. The moulds were classified under Heading No. 6807.00 of the Schedule. The appellant contended that Plaster of Paris moulds are integral to the manufacture of sanitaryware and should be considered as inputs for the final product, ceramic ware, as recognized by Notification 221/86.

3. Applicability of Notifications No. 217/86 and 221/86:
The crux of the dispute was whether Plaster of Paris used in the production of moulds, which are then used to manufacture ceramic products, is eligible for exemption under Notification 217/86. The Department argued that since the moulds are exempt from duty under Notification 221/86, the proviso to Notification 217/86 bars the exemption for Plaster of Paris. The Tribunal, however, held that Plaster of Paris moulds, being necessary for the manufacture of sanitaryware, constitute an input under Notification 221/86. The Tribunal emphasized that the moulds are not the final product and are not cleared outside the factory, thus the benefit of Notification 217/86 should be extended to Plaster of Paris used in making these moulds.

4. Limitation Period for Issuing Demand-cum-Show Cause Notices:
The appellant argued that the demand-cum-show cause notices were barred by limitation due to the dates of the corrigenda issued. The Department contended that the notices were within the time limit and relied on the Tribunal's decision in Mahavir Products v. Collector of Central Excise, which held that corrigenda did not vitiate the notices. The Tribunal did not find it necessary to discuss this issue in detail, given the resolution of the primary dispute.

Conclusion:
The Tribunal set aside the impugned order and allowed the appeal, granting consequential relief to the appellants. The Tribunal concluded that Plaster of Paris used in the production of moulds, which are then used to manufacture ceramic products, is eligible for exemption under Notification 217/86. The Tribunal emphasized a harmonious construction of Notifications 217/86 and 221/86 to avoid absurd results and upheld the recognition of Plaster of Paris moulds as inputs for the manufacture of ceramic products under Notification 221/86.