1996 (2) TMI 223 - AT - Central Excise

Summary

Issues Involved:
1. Removal of finished goods without payment of duty.
2. Classification and duty liability under Central Excise Rules.
3. Applicability of Notification No. 118/75-C.E.
4. Allegation of suppression and time-barred demand.

Detailed Analysis:

1. Removal of Finished Goods Without Payment of Duty:

The core issue revolves around M/s. Tata Chemicals Ltd. (Tata) removing finished goods without paying the required central excise duty, allegedly in violation of Rule 56C of the Central Excise Rules, 1944. Tata had received MS Dished ends (Hemispherical bodies) from M/s. P.J. Surotia & Co. (PJ) after these were lined with stainless steel plates. These goods were then used in the MUW plant without paying duty under Item No. 68 of the Tariff.

2. Classification and Duty Liability Under Central Excise Rules:

The goods in question, initially classified under Item No. 25(8) of the Tariff before lining, were reclassified under Item No. 68 post-lining. The adjudicating authority noted that Rule 56C's special procedure was applicable to goods under Item No. 68, not Item No. 25(8). The finished goods, lined hemispheres, were not used as raw materials or components for excisable goods but as parts of the MUW plant. Therefore, the goods did not qualify for duty exemption under Rule 56C, and the duty liability had to be discharged as per clause (2) of Rule 56C.

3. Applicability of Notification No. 118/75-C.E.:

Tata claimed that the goods were exempt under Notification No. 118/75-C.E., which provides exemption for goods manufactured in a factory for use within the same factory or another factory of the same manufacturer. However, since the lined hemispheres were manufactured by PJ, not Tata, and used in the MUW plant, they did not qualify for this exemption. The adjudicating authority concluded that the processes of drilling, welding, lagging, and fixing safety valves did not constitute manufacturing, and thus, the exemption was not applicable.

4. Allegation of Suppression and Time-Barred Demand:

Tata argued that the demand was time-barred due to a lack of suppression. However, correspondence between Tata and the Revenue indicated otherwise. The adjudicating authority found that Tata had not disclosed the necessary details in their application and had not accounted for the goods in the RG-1 Register or the RT-12 Returns. This non-disclosure constituted suppression, justifying the extended period for issuing the show cause notice.

Conclusion:

The Tribunal upheld the adjudicating authority's order, finding no infirmity in the demand for duty of Rs. 70,319.16 and the imposition of a Rs. 10,000/- penalty. The appeal was rejected, affirming that Tata had contravened the provisions of Rule 56C and was not eligible for the claimed exemptions.