1996 (11) TMI 173 - AT - Central Excise

Summary

Issues Involved:
1. Classification and valuation of Domestic Electric Grinding Mills (Grinders)
2. Central Excise duty liability and exemption
3. Penalty imposition under Central Excise Rules
4. Limitation and extended period of limitation

Issue-wise Detailed Analysis:

1. Classification and Valuation of Domestic Electric Grinding Mills (Grinders):
The primary issue revolves around the classification of Domestic Electric Grinding Mills (Grinders) sold under the brand name "Navjivan" during the period 1-4-1983 to 31-3-1984. The goods were removed without payment of Central Excise duty. The appellant, M/s. Gurukrupa Trading Co. (M/s. Guru), argued that the grinders were not classifiable under Tariff Item 33C of the Tariff and that grinders removed without motors should fall under Tariff Item 68. However, the Tribunal held that the grinders, whether with or without motors, were Domestic Electrical Appliances meant for working with electricity and thus classifiable under Tariff Item 33C. The Tribunal emphasized that the classification does not change if the appliance can be described as an electrical appliance in common parlance, even if supplied without a motor.

2. Central Excise Duty Liability and Exemption:
The Tribunal confirmed the demand of Central Excise duty amounting to Rs. 69,879.60. The adjudicating authority had already accounted for the small-scale exemption limit of Rs. 7.5 lakhs, arriving at a duty liability on the value of clearances in excess of Rs. 4,43,680/-. The Tribunal noted that the grinders could not function without electric motors and were marketed as a complete unit with in-built electrical devices, supporting the classification under Tariff Item 33C.

3. Penalty Imposition under Central Excise Rules:
The adjudicating authority imposed a penalty of Rs. 2 lakhs on M/s. Guru under Sub-rule (1) of Rule 173Q of the Central Excise Rules, 1944, for contravening various provisions of the Central Excise Rules. The Tribunal, considering all relevant facts and circumstances, reduced the penalty amount to Rs. 50,000/-.

4. Limitation and Extended Period of Limitation:
The issue of limitation was discussed extensively. The Tribunal upheld the invocation of the extended period of limitation under the proviso to Sub-section (1) of Section 11A of the Central Excises and Salt Act, 1944, due to specific allegations of fraud, willful misstatement, and suppression of facts with an intent to evade payment of duty. The Tribunal noted that the appellants had not filed any declaration, obtained any Central Excise license, nor maintained statutory accounts. The matter was detected during a surprise visit by Central Excise officers, justifying the extended period of limitation.

Conclusion:
The appeal was largely rejected, except for the reduction in the penalty amount from Rs. 2,00,000/- to Rs. 50,000/-. The Tribunal confirmed the classification of the grinders under Tariff Item 33C, upheld the demand for Central Excise duty, and justified the invocation of the extended period of limitation due to the appellants' non-compliance with Central Excise regulations.