1995 (12) TMI 178 - AT - Central Excise

Summary

Issues Involved: Alleged non-payment of excise duty on manufacturing tetrapods used in construction of breakwater, time-barred demand, eligibility for Modvat credit, liability of duty payment by contractors, and denial of Modvat credit due to procedural formalities.

Non-Payment of Excise Duty on Tetrapods: The appellants were alleged to have manufactured tetrapods of cement for breakwater construction without paying excise duty. The Collector confirmed a demand of Rs. 39,64,744/- and imposed penalties, including an individual penalty on the person in charge of Excise matters.

Time-Barred Demand: The appellants argued that the demand was time-barred due to frequent despatches of cement with Excise knowledge. They contended that since all despatches were known to the department, the extended period for demand should not apply.

Eligibility for Modvat Credit: The appellants claimed Modvat credit on cement used for manufacturing tetrapods, arguing that if tetrapods were dutiable, the credit should be allowed. They presented evidence of cement despatches for tetrapod manufacture to support their claim.

Liability of Contractors for Duty Payment: The appellants asserted that since tetrapods were made only by contractors, they were not liable for duty payment. However, it was found that the appellants were considered manufacturers of tetrapods due to their engagement in the construction process.

Denial of Modvat Credit: The JDR argued against granting Modvat credit, citing non-compliance with formalities for credit availment and lack of documentation showing the use of duty-paid cement for tetrapod manufacture.

Judgment and Remand: The Tribunal held that tetrapods were movable goods capable of being marketed. The extended demand period applied due to the failure to inform Excise authorities of tetrapod manufacturing. While upholding duty liability on tetrapods, the case was remanded for verification of documents showing use of duty-paid cement. Modvat credit was to be extended upon verification, and duty payable would be computed for recovery.

Penalties and Redemption Fine: The Tribunal set aside penalties due to a bona fide misconception regarding dutiability of tetrapods and construction activities. Considering the nature of the goods, any liability for confiscation was remitted. The appeal was disposed of accordingly, with stay petitions treated as disposed of.