1992 (4) TMI 155 - AT - Central Excise

Summary

Issues: Duty liability on Compressed Wood Board and components, Time-barred demand, Interpretation of Section 51(2)(d) of the Finance Act, 1982

Duty liability on Compressed Wood Board and components:
The case involved the appellants engaged in manufacturing Compressed Wood Board and its components falling under Item 16-B of the Central Excise Tariff. The dispute arose regarding the duty liability on Compressed Wood Board clandestinely removed for captive consumption for the manufacture of components and articles during a specific period. The Collector (Appeals) confirmed the duty demand on the grounds that improved wood and articles of wood were distinct products mentioned in the tariff entry. The argument of double taxation was dismissed since the same product was not being subjected to duty twice. However, the Tribunal referred to previous decisions where duty on intermediate products captively consumed for final products was not chargeable if duty was paid on the final product and both products were covered by the same tariff sub-item and Rule 56A applied. As both Compressed Wood and its articles were covered by the same tariff item and duty was paid on the final products, no duty was recoverable on the Compressed Wood used captively during the relevant period.

Time-barred demand:
The Collector (Appeals) held that the demand for the period prior to a specific date was time-barred as it could only be issued within a prescribed time limit under Section 11A of the Central Excises and Salt Act, 1944, not under Section 51(2)(d) of the Finance Act, 1982. The appellants argued that the demand issued under Section 51(2)(d) was subject to the limitation under Section 11A, and the demand in this case was invalid as it was for a period after the specified date. The Tribunal agreed with the appellants and held that demands under Section 51 were subject to the limitation of Section 11A.

Interpretation of Section 51(2)(d) of the Finance Act, 1982:
The dispute also revolved around the interpretation of Section 51(2)(d) of the Finance Act, 1982, which allowed for the recovery of duty on Compressed Wood captively consumed for the manufacture of articles. The respondent argued that due to an amendment in the Central Excise Rules, duty was recoverable on Compressed Wood consumed by the appellants during a specific period. The Tribunal, however, referred to previous decisions where recovery of duty on intermediate products captively consumed for final products was considered double taxation if certain conditions were met. The Tribunal held that no duty was recoverable on the Compressed Wood used captively during the relevant period, based on the principles established in previous decisions.

Conclusion:
In conclusion, the Tribunal set aside the impugned order and allowed the appeal in favor of the appellants, providing consequential relief. The cross-objection filed by the respondents was also disposed of accordingly. The judgment highlighted the principles of duty liability, time limitations, and the interpretation of relevant provisions to determine the duty liability on Compressed Wood Board and its components.