1992 (10) TMI 198 - AT - Central Excise

Summary

Issues Involved:
1. Classification of gullies/patlies of copper/brass.
2. Eligibility for exemption under various notifications.
3. Applicability of the extended period of limitation.
4. Imposition of penalties.

Issue-wise Detailed Analysis:

1. Classification of Gullies/Patlies of Copper/Brass:
The appellants challenged the reclassification of gullies/patlies of copper/brass under Heading 7403.21 of the Central Excise Tariff Act, 1985. The department proposed reclassification under TI 26A(1) of the C.E.T. as it existed prior to 28-2-1986 and thereafter under sub-heading 7401.00 or 7403.21 of the CETA, 1985. The adjudicating authority upheld the reclassification, noting that the appellants had not contested the proposal on the grounds of excisability. The tribunal found no reason to interfere with this finding and held that gullies/patlies fall for classification under Heading 7403.21 CETA, 1985 subsequent to 1-3-1988.

2. Eligibility for Exemption under Various Notifications:
The appellants contended that they were eligible for exemption under Notification Nos. 174/84, 149/86, 98/88, and 178/88 as amended by 68/89. The department argued that the conditions for exemption were not met because the inputs (waste and scrap of copper/brass) were exempt from duty. The tribunal referred to various judicial precedents, including the Patna High Court's decision in Tata Yodogawa Ltd. v. Union of India and the Tribunal's decisions in Arun Auto Spinning and Manufacturing Co. v. CCE and Auto Piston Manufacturing Co. Ltd. v. CCE, which interpreted the term "leviable" to include goods exempted from duty. The tribunal concluded that gullies/patlies and sheets/circles of copper/brass are eligible for exemption under the mentioned notifications.

3. Applicability of the Extended Period of Limitation:
The adjudicating authority invoked the extended period of limitation due to non-disclosure and non-accountal of production and clearance of gullies/patlies. The tribunal, however, found that the appellants had maintained relevant records and filed returns, indicating captive consumption of waste and scrap for making gullies/patlies. Consequently, the tribunal held that the extended period of limitation was not applicable and that the demands were barred by limitation.

4. Imposition of Penalties:
The adjudicating authority imposed penalties on the appellant firms and their partners. Given the tribunal's findings on the issues of classification, eligibility for exemption, and limitation, it set aside the penalties imposed in all four appeals.

Conclusion:
1. Gullies/patlies of copper/brass are to be classified under Heading 7403.21 of CETA, 1985 for the period 1-3-1988 onwards.
2. Gullies/patlies and sheets/circles of copper/brass are eligible for exemption under the specified notifications.
3. The demands are barred by limitation.
4. The penalties imposed in all four appeals are set aside.

The appeals are disposed of in the above terms.