1992 (7) TMI 165 - AT - Central Excise

Summary

Issues Involved:
1. Limitation period for demand of duty u/s 11A of Central Excises and Salt Act, 1944.
2. Clubbing of clearances of different units for excise duty purposes.
3. Validity of the demand for duty and penalties imposed.
4. Classification of Gharghanti under Central Excise Tariff.

Summary of Judgment:

1. Limitation Period for Demand of Duty:
The appellants argued that the demand is barred by limitation as it extends beyond the five-year limit u/s 11A of the Central Excises and Salt Act, 1944. The demand was for the period from 1-7-1981 to 31-3-1985, but the show cause notice was issued on 12-8-1986. The Tribunal found merit in this argument, noting non-application of mind by the Collector on this aspect.

2. Clubbing of Clearances:
The Department alleged that M/s. Swastik Engineering Works, M/s. Saraswati Engineering Works, and M/s. Suvidha Products were not independent units but were working together to evade duty. The Tribunal examined the evidence, including the common use of the trademark 'Milcent', shared etching work, and the presence of a common partner, Shri Rohitbhai J. Patel. However, the Tribunal found that the appellants provided plausible explanations, such as separate accounting for grinding stones and payment of royalties for the trademark. The Tribunal also noted the deposition of the Superintendent of Central Excise, who confirmed that all three units were engaged in manufacturing Gharghanti and had filed separate declarations.

3. Validity of the Demand for Duty and Penalties:
The Tribunal found that the Department did not satisfactorily establish that M/s. Saraswati Engineering Works and M/s. Suvidha Products were not engaged in the manufacture of complete Gharghanti. The evidence, including the Panchnama and deposition of the Superintendent, supported the appellants' claim of independent manufacturing capacity. The Tribunal held that the Department's case for clubbing the units was not substantiated with satisfactory evidence. Consequently, the demand for duty and penalties imposed on the appellants were set aside.

4. Classification of Gharghanti:
The appellants contended that Gharghanti should be classified as domestic electrical appliances under Item 33C of the Central Excise Tariff and be entitled to exemption under Notification No. 33/69. The Tribunal noted that the Collector did not provide a specific finding on this classification issue. Given the decision to set aside the demand for duty and penalties, the Tribunal did not provide a separate finding on the classification under Item 33C.

Conclusion:
The appeals were allowed, and the demand for duty and penalties imposed by the Collector were set aside. The Tribunal found that the Department failed to establish that the appellants were evading duty by operating as a single unit. The Tribunal also noted the lack of a specific finding on the classification issue by the Collector.