1994 (11) TMI 208 - AT - Central Excise

Issues:
1. Time-barred demand of Central Excise duty.
2. Applicability of Notification No. 281/86-C.E. and Notification No. 217/86-C.E.
3. Interpretation of the Tariff regarding dolomite processing.
4. Allegations of suppression and imposition of penalty under Rule 173Q of the Central Excise Rules.

Time-barred demand of Central Excise duty:
The appellant, engaged in manufacturing iron and steel articles, processed dolomite into burnt dolomite for captive consumption. The Collector of Central Excise demanded Rs. 18,231 for the period from 20-3-1990 to December 1990, imposing a penalty of Rs. 10,000 under Rule 173Q of the Rules. The appellant argued that the demand was time-barred, citing the Supreme Court's decision on the extended period of limitation. The Tribunal held that the demand was beyond the normal period of limitation, as the facts did not support invoking the extended period. The show cause notice was issued on 6-12-1991, demanding duty for March 1986 to December 1990, but the goods were not dutiable before 20-3-1990. The Tribunal found no suppression to justify the extended demand.

Applicability of Notification No. 281/86-C.E. and Notification No. 217/86-C.E.:
The appellant claimed exemption under Notification No. 281/86-C.E. and Notification No. 217/86-C.E. for the calcined dolomite used in lining their furnace. The Collector rejected the claim under both notifications, stating that dolomite usage in the furnace did not qualify for exemption. The Tribunal did not delve into this issue as the demand was deemed time-barred.

Interpretation of the Tariff regarding dolomite processing:
The Tariff was amended in 1990 to include dolomite under Heading No. 25.05, making calcined dolomite dutiable. The Tribunal observed that the processing of dolomite by the appellant, involving burning, calcination, crushing, and powdering, transformed the product for specific use in furnace lining. The Tribunal differentiated this process from mere crushing and grinding, as in previous cases. The Tribunal concluded that the goods were excisable post-processing, aligning with the Tariff's provisions.

Allegations of suppression and imposition of penalty under Rule 173Q:
The Collector alleged suppression by the appellant to evade Central Excise duties from March 1986 to December 1990. However, the Tribunal found the Collector's reasoning flawed, as the demand for the period before 20-3-1990 was dropped. The Tribunal noted that the show cause notice dated 6-12-1991 did not adequately support the allegations of suppression. Consequently, the Tribunal set aside the penalty and accepted the appeal, ruling in favor of the appellant.

In conclusion, the Tribunal ruled in favor of the appellant, M/s. Birla Jute & Industries Limited, Satna (M.P.), setting aside the demand for Central Excise duty and penalty imposed by the Collector of Central Excise, Raipur. The judgment emphasized the importance of adherence to statutory limitations and the necessity of concrete evidence to support allegations of suppression in excise duty cases.

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