1993 (6) TMI 155 - AT - Central Excise

Summary

Issues:
1. Whether the conversion of Ammonium Nitrate Melt into Flakes amounts to manufacture under Section 2(f) of the Central Excises and Salt Act, 1944.
2. Whether the demand for duty on Ammonium Nitrate Flakes and the penalty imposed by the Collector are sustainable.
3. Whether the extended period for confirmation of the demand based on suppression and clandestine removal is valid.

Analysis:
1. The appellants, engaged in manufacturing explosives, procured Ammonium Nitrate melt from a steel plant for production. The Department alleged clandestine removal of 641.610 MTs of Ammonium Nitrate Flakes without duty payment. The appellants claimed the conversion of melt to flakes was not manufacturing and goods were exempt under Notification No. 118/75. The Collector upheld the duty demand and penalty, rejecting the appellants' contentions.

2. The appellants argued that the conversion process did not constitute manufacturing under the Act and goods were exempt under Notification No. 118/75. They contended that the demand based on suppression and clandestine removal was unjustified as the goods were used captively and fully accounted for in private records. The Department maintained that duty was payable on cleared goods and the Collector's findings on suppression were valid.

3. The Tribunal found that the conversion of Ammonium Nitrate Melt into Flakes amounted to manufacturing under the Act. Regarding the extended period for demand confirmation, it noted the appellants' consistent declaration of exempted goods for captive use. The Tribunal remanded the case for re-adjudication, emphasizing the appellants' right to present their private records and granting a personal hearing for a fair assessment.

This judgment highlights the interpretation of manufacturing under the Central Excises and Salt Act, the validity of duty demands based on suppression, and the importance of proper record-keeping and accounting practices in excise matters.