1993 (6) TMI 177 - AT - Central Excise

Issues Involved:

1. Waiver of pre-deposit of duty and penalty.
2. Time-barred demand under Section 11A of the Central Excises & Salt Act, 1944.
3. Whether providing insulation to Pressure Vessels constitutes manufacture.
4. Suppression of facts and intent to evade duty.
5. Demand in respect of Fibre Reinforced Plastic Sheet (FRP).
6. Examination of the case on merits regarding the Pressure Vessels.

Issue-wise Detailed Analysis:

1. Waiver of Pre-deposit of Duty and Penalty:

The appellants filed a stay petition seeking waiver of pre-deposit of a duty of Rs. 5,04,535/- and a penalty of Rs. 50,000/-. The Tribunal granted the waiver pending disposal of the appeal, as the appeal itself was proposed to be disposed of on the short point of limitation.

2. Time-barred Demand under Section 11A:

The appellants argued that the demand was time-barred as the duty was demanded beyond the period of six months by invoking the proviso to Section 11A of the Central Excises & Salt Act, 1944. The show cause notice was dated 3-8-1992, attested on 10-8-1992, and received by the appellant on 11-8-1992, while the Pressure Vessels were removed from the factory on 15-9-1991 and 9-2-1992. The Tribunal held that the demand was indeed time-barred, citing the decision in the case of Singareni Collieries Co. Ltd. v. CCE and Associated Cement Companies Ltd. v. CCE, which emphasized that there must be an intention to evade duty for the extended period to apply.

3. Whether Providing Insulation to Pressure Vessels Constitutes Manufacture:

The appellants contended that merely providing insulation to already manufactured Pressure Vessels did not constitute manufacture. The Tribunal observed that the Vessels were already manufactured to the specifications required under the Statics and Mobile Pressure Vessels (Unfired) Rules, 1981, and providing insulation did not change their basic character. Therefore, the Tribunal held that providing insulation did not amount to manufacture and the Vessels could not be reassessed under Tariff Entry 73.11 after insulation.

4. Suppression of Facts and Intent to Evade Duty:

The Department argued that the appellants had not informed the Central Excise authorities about the manufacturing activity, thus maintaining the charge of suppression. However, the Tribunal found that the appellants had no intention to hide anything from the authorities, as the insulation work was done openly, and necessary intimations were given. The Tribunal cited the decision in Singareni Collieries Co. Ltd., emphasizing that there must be an intention to evade duty for the extended period to apply, which was not established in this case.

5. Demand in Respect of Fibre Reinforced Plastic Sheet (FRP):

The appellants did not contest the demand for duty in respect of Fibre Reinforced Plastic Sheet (FRP). The Tribunal upheld the demand, noting that the FRP sheets were captively consumed without payment of duty and without observing any Central Excise formalities. A penalty of Rs. 2,000/- was levied on the appellants under Rule 173Q of the Central Excise Rules, 1944.

6. Examination of the Case on Merits Regarding the Pressure Vessels:

The Tribunal observed that the lower authority had not examined the issue in depth regarding the Pressure Vessels. The Tribunal directed the lower authority to re-examine the issue on merits, considering the observations made and the case law cited.

Conclusion:

The appeal was allowed on the ground of limitation, setting aside the lower authority's order regarding the time-barred demand. The demand for FRP sheets was upheld with a reduced penalty. The case was remanded to the lower authority for a detailed examination of the merits concerning the Pressure Vessels.

← Previous Next →