1996 (4) TMI 219 - AT - Central Excise

Issues Involved:
1. Exemption under Notification No. 179/77-C.E.
2. Exemption under Notification No. 46/81-C.E.
3. Exemption under Notification No. 182/82-C.E.
4. Limitation under Section 11A of the Central Excises and Salt Act, 1944.
5. Confiscation of seized goods.
6. Calculation of duty based on retailer's price.

Detailed Analysis:

1. Exemption under Notification No. 179/77-C.E.:
The appellant contended that they were entitled to an exemption as they used a power-driven portable drill only occasionally. However, the tribunal noted that the appellant failed to prove the occasional use of the drill. The statements from the appellant's representatives suggested regular use of power in manufacturing processes. The term "ordinarily used" was interpreted in its common English sense, implying regular usage in manufacturing. Consequently, the tribunal rejected the appellant's plea for exemption under Notification No. 179/77-C.E., agreeing with the Collector's decision.

2. Exemption under Notification No. 46/81-C.E.:
The appellant argued that their unit should not be considered a factory under the Factories Act, 1948. The tribunal, referencing Section 2(m)(i) and 2(l) of the Factories Act, determined that the number of workers exceeded ten, thus classifying the premises as a factory. The inclusion of R&D employees and a sweeper as workers was justified, as their roles were connected to the manufacturing process. The tribunal cited a relevant decision (M/s. Industrial Instruments & Control v. Collector of Central Excise) to support this conclusion. Therefore, the appellant was not entitled to the exemption under Notification No. 46/81-C.E.

3. Exemption under Notification No. 182/82-C.E.:
The appellant did not press for this exemption during the hearing. The tribunal noted that the FRP Cooling Towers comprised various components, including steel and plastics, and could not be classified as articles of plastics. Thus, the exemption under Notification No. 182/82-C.E. was not applicable.

4. Limitation under Section 11A of the Central Excises and Salt Act, 1944:
The appellant argued that the show cause notice was barred by the six-month limitation period. However, the tribunal found that the appellant had not demonstrated a bona fide belief that their activities were non-dutiable. Given the appellant's familiarity with Central Excise procedures, the tribunal upheld the use of the extended period for issuing the show cause notice.

5. Confiscation of Seized Goods:
The tribunal found that the Collector was not justified in confiscating the goods and imposing a redemption fine without first calling for the production of the goods. The tribunal referenced a previous decision (M/s. Grauer & Well (I) Ltd. v. Collector of Central Excise) to support this view. Consequently, the tribunal set aside the confiscation order, allowing the Department to enforce the terms of the bond in a court of law if they chose to do so.

6. Calculation of Duty Based on Retailer's Price:
The tribunal agreed with the appellant that the duty should be calculated on a cum-duty basis, meaning the price charged to customers should include the excise duty. The adjudicating authority was directed to re-quantify the demand of duty accordingly.

Conclusion:
The tribunal confirmed the duty demand subject to re-quantification and reduced the penalty from Rs. 1 lakh to Rs. 50,000, considering the appellant had already deposited Rs. 4 lakhs before the issuance of the show cause notice. The appeal was otherwise rejected, and the Collector's order was largely upheld with the specified modifications.

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