1997 (8) TMI 129 - AT - Central Excise

Summary

Issues:
1. Classification of steel bands manufactured by the appellants under the Central Excise Tariff Act, 1985.
2. Whether the process of cutting and welding steel bands amounts to manufacture.
3. Applicability of extended period of limitation for recovery of duty.
4. Entitlement of Modvat credit for duty paid on steel bands.
5. Imposition of penalty on the appellants.

Detailed Analysis:
1. The case involved the classification of steel bands manufactured by the appellants under the Central Excise Tariff Act, 1985. The officers found that the appellants had manufactured C.I. Ingot moulds with steel bands and cleared them at a nil rate of duty under a specific notification. The steel bands were not declared as a manufactured product by the appellants, leading to a dispute over the correct classification and duty liability.

2. The main contention raised by the appellants was whether the process of cutting and welding steel bands amounted to "manufacture" under the excise law. The appellants argued that no new commercial commodity emerged from this process and that they should not be held liable for duty evasion. However, the department contended that the transformation of steel plates into steel bands, according to technical specifications, constituted manufacture, satisfying the test of excisability.

3. The issue of the extended period of limitation for recovery of duty was also raised. The appellants argued that since the demand was beyond six months and there was no intention to evade duty, the extended period should not apply. However, the tribunal held that the activities of the appellants did amount to manufacture, and thus, the extended period of limitation was applicable.

4. The appellants also raised the issue of entitlement to Modvat credit for duty paid on steel bands. The tribunal held that the appellants would be entitled to the benefit of Modvat credit but remanded the matter to the Adjudicating authority for quantifying the demand and granting relief based on relevant legal principles.

5. Lastly, the tribunal addressed the imposition of a penalty on the appellants. Considering the facts and circumstances of the case, the tribunal reduced the penalty imposed by the Adjudicating authority from Rs. 15,000 to Rs. 1,000. Both appeals were disposed of accordingly, with directions for quantifying the demand and granting relief to the appellants.