1997 (7) TMI 243 - AT - Central Excise

Summary

Issues:
1. Duty demand on HDPE tapes consumed in manufacturing HDPE fabrics.
2. Concessional duty rate on HDPE tapes used for stitching woven fabrics.
3. Duty on HDPE sacks manufactured from circular looms.
4. Imposition of penalty.

Analysis:

Issue 1:
The appellant contested duty demands on HDPE tapes consumed in manufacturing HDPE fabrics, citing exemption under Rule 49. The department argued the tapes' use rendered the appellant ineligible for exemption. The Tribunal referenced previous decisions, including CCE v. Chitra Polypack Industries, to support the appellant's position. Ultimately, the Tribunal ruled in favor of the assessee based on settled case law, allowing exemption under Rule 49.

Issue 2:
Regarding the concessional duty rate for HDPE tapes used in stitching woven fabrics, the department claimed duty was applicable unless the tapes were intended for weaving sacks. The appellant referred to a telex from the Board of Excise and Customs and previous Tribunal decisions, such as M/s. Auro Plast (India) Ltd., to support their case. The Tribunal upheld the appellant's argument, stating that no liability arose for using HDPE tapes in manufacturing HDPE sacks, in line with previous decisions.

Issue 3:
The duty demand on HDPE sacks manufactured from circular looms was not contested by the appellants. Consequently, this ground was dismissed by the Tribunal as the appellants did not pursue this plea.

Issue 4:
A penalty of Rs. 7 lakhs was imposed, exceeding the duty demanded of Rs. 1 lakh. The appellants argued there was no intent to evade duty. Considering the substantial reduction in duty amount and the lack of intent, the Tribunal reduced the penalty to Rs. 1 lakh. The appeal was disposed of with this modification in penalty.

This judgment highlights the importance of legal precedents, interpretation of exemption rules, and the consideration of intent in imposing penalties in excise duty cases.