1998 (2) TMI 206 - AT - Central Excise

Issues:
1. Allegations of manufacturing items from raw materials supplied by another company.
2. Allegations of suppressing facts to evade duty payment.
3. Eligibility for exemption under Notification No. 214/86.
4. Demand of duty for the financial year 1987-88.
5. Confirmation of demand by the adjudicating authority.
6. Applicability of duty on manufactured goods.
7. Estoppel on challenging excisability.
8. Legal plea of no manufacturing activity.
9. Comparison with previous judgments on similar goods.
10. Disposal of appeal.

Analysis:
1. The show cause notice alleged that the appellant firm was manufacturing goods from raw materials supplied by another company and classified under a specific sub-heading of the Central Excise Tariff Act, 1985. It was further claimed that the appellant suppressed this information to avoid duty payment and was not eligible for exemption under certain notifications, leading to a proposed duty demand for a specific financial year.

2. The adjudicating authority confirmed the duty demand, prompting the Revenue to appeal the decision. The appellant argued that the goods in question were not subject to duty as they did not involve manufacturing activities during the relevant period, citing precedents where similar goods were deemed not to constitute manufacturing.

3. The Revenue contended that the appellant had previously availed benefits under certain rules and headings without questioning the excisability of goods, implying that the challenge to excisability at this stage was unwarranted. Reference was made to a judgment involving the liability of goods under a specific tariff heading.

4. The Tribunal considered both arguments and emphasized that the question of excisability hinges on whether manufacturing activity occurred, irrespective of past practices or benefit availed. The appellant was not estopped from claiming the absence of manufacturing activity, especially if the duty liability previously fell on another entity.

5. Relying on a previous judgment involving similar goods, the Tribunal concluded that no manufacturing activity took place, leading to the absence of duty liability. Consequently, the appeal was disposed of based on the finding of no manufacturing activity and duty liability.

6. The Tribunal's decision was based on the absence of manufacturing activity, aligning with precedents and emphasizing the legal question of excisability. Other arguments raised by the appellant, such as the time bar on the demand, were not addressed due to the primary finding on manufacturing activity.

7. The judgment highlighted the importance of assessing manufacturing activity to determine duty liability, regardless of past practices or benefit availed. By comparing the present case with previous judgments on similar goods, the Tribunal established the absence of manufacturing activity and, consequently, the absence of duty liability.

8. In conclusion, the Tribunal's decision centered on the lack of manufacturing activity, which led to the dismissal of the duty demand. The legal plea of no manufacturing activity was upheld, resulting in the disposal of the appeal in favor of the appellant.

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