1997 (11) TMI 232 - AT - Central Excise

Summary

Issues:
Demand of duty on Lead Oxide for captive consumption, Bar of limitation for duty demand, Marketability of Lead Oxide, Classification of goods, Excisability of goods, Penalty imposition.

Analysis:

1. Demand of duty on Lead Oxide for captive consumption:
The appeal concerned the demand of duty on Lead Oxide produced by the appellants for captive consumption. The appellants argued that the Lead Oxide they manufactured was specifically tailored for their stationary batteries production and was not intended for sale in the market. They contended that the Lead Oxide was of a variety usable only by them and had a short shelf life of 3 weeks. The department claimed that surplus Lead Oxide was sold, indicating marketability. The Tribunal noted that the Lead Oxide was a chemically well-defined item and capable of being sold due to its specific characteristics, despite not being actively marketed. The Tribunal held that the duty demand was valid, as the Lead Oxide was a distinct commodity technically, suitable for end-use, and excisable.

2. Bar of limitation for duty demand:
The appellants argued that the duty demand was time-barred as the show cause notice was issued beyond the 6-month limit from the date the department acquired knowledge about the captive consumption. The department contended that the appellants had prior knowledge of the excisability of the goods and should have paid duty accordingly. The Tribunal held that the appellants' prior filing of a price list indicated their awareness of the marketability of the goods, even if sales did not materialize. Therefore, the duty demand was not barred by limitation.

3. Marketability of Lead Oxide:
The department argued that the Lead Oxide, despite being captively consumed, was marketable due to its specific characteristics and structural formation. The Tribunal agreed, emphasizing that the Lead Oxide's stability and suitability for end-use in batteries rendered it marketable, regardless of actual sales.

4. Classification of goods and Excisability:
The appellants had classified the Lead Oxide based on a trade notice, but the department contended that excisability was the key issue, irrespective of classification. The Tribunal held that once goods were found to be excisable, duty was applicable, and the appellants failed to provide a valid reason for not paying duty on captively consumed Lead Oxide.

5. Penalty imposition:
The Tribunal upheld the duty demand and imposed a reduced penalty of Rs. 1,00,000 on the appellants, considering their conduct in withholding information on production and clearances for captive consumption, indicating an intention to evade duty payment.

In conclusion, the Tribunal ruled in favor of the department, upholding the duty demand on Lead Oxide for captive consumption and imposing a penalty on the appellants.