1994 (4) TMI 165 - AT - Central Excise

Summary

Issues:
Manufacture of Refrigerators with Rigid Polyurethane Foam for captive consumption without proper declaration or classification list, Alleged evasion of Central excise duty, Application of extended period under Section 11A, Marketability of Polyurethane Foam, Interpretation of excisability of goods produced by the "One Shot" process.

Analysis:
The appellants were accused of manufacturing and using Rigid Polyurethane Foam in Refrigerators without complying with Central Excises and Salt Act, 1944 provisions, leading to an alleged evasion of duty. The dispute centered around whether the process employed by the appellants constituted "manufacture" and if the goods produced were excisable. The Collector confirmed a demand for duty and imposed a penalty, citing wilful suppression of facts. The appellants argued that their process did not result in marketable goods and that the Department was aware of their activities through Modvat credit declarations.

The appellants relied on various Tribunal judgments to support their contention that Polyurethane Foam produced by their process was not excisable. They emphasized that the Department's circulars and past treatment of the goods supported their belief. The respondents, however, argued that the product was excisable as clarified by the Board, and the appellants had failed to comply with necessary formalities, indicating an intent to evade duty.

The Tribunal examined the Andhra Pradesh High Court's decision on a similar matter and concluded that the Polyurethane Foam produced by the appellants was indeed excisable. The Tribunal also assessed the Collector's invocation of the extended period under Section 11A, noting discrepancies in the Board's circulars and the lack of communication regarding changes in excisability criteria. Citing Supreme Court precedents, the Tribunal held that the extended period could not be applied unless there was evidence of fraud, collusion, wilful misstatement, or suppression of facts.

Ultimately, the Tribunal ruled in favor of the appellants, limiting the enforceable demand to six months from the show cause notice date. The decision highlighted the importance of clear communication from excise authorities regarding changes in excisability criteria and the necessity of meeting specific criteria for invoking the extended period under Section 11A.