1998 (4) TMI 235 - AT - Central Excise

Factory - Precincts - Exemption for captive use - Proforma credit/Set off - Demand - Limitation

Summary

Issues:
1. Whether the revolving screening plant machinery manufactured by the appellant is leviable to excise duty.
2. Whether the extended period of time for issuing the show cause notice under Section 11A(1) of the Central Excise Act was available to the department.

Analysis:

Issue 1: Leviability of Excise Duty on Screening Plant Machinery
The appellant, a cement manufacturer, designed a revolving screening plant for removing impurities from lime shell dredged from a lake bed. The appellant argued that the screening plant was unique, not available in the market for sale, and therefore not chargeable to excise duty. The appellant contended that the plant was not manufactured in a factory and thus not liable to duty under the Central Excise Tariff. However, the Tribunal held that the screening plant qualifies as goods and is dutiable, citing precedents emphasizing marketability as the key factor for dutiability. The Tribunal rejected the appellant's claims regarding duty exemption notifications and affirmed the duty liability on the screening plant.

Issue 2: Extended Period for Issuing Show Cause Notice
The appellant argued that the demand of duty was time-barred as the screening plant was assembled in 1985 and put into use the same year, with no duty demanded due to mutual understanding with the department. The appellant contended that the extended period for issuing the show cause notice was not applicable as no specific averment about suppression was made in the notice. However, the Tribunal held that the extended period was available to the department as the appellant failed to file a classification list or pay duty before clearing the screening plant. The Tribunal noted that specific allegations of intent to evade duty in the notice justified invoking the extended time limit under Section 11A(1) of the Central Excise Act.

Benefit of Notification No. 201/79
The Tribunal agreed with the appellant that they were eligible for the benefit of Notification No. 201/79 for duty paid components used in manufacturing the screening plant. The Tribunal criticized the adjudicating authority for not following precedents allowing benefit under the notification even if procedural requirements were not fully met. The appellant was granted the benefit of the notification, subject to proving the duty paid status of inputs used.

Conclusion
The Tribunal upheld the duty liability on the screening plant machinery, rejected the appellant's arguments on duty exemptions, and allowed the benefit of Notification No. 201/79. The extended period for issuing the show cause notice was deemed applicable, and the demand was not time-barred. The appeal was disposed of, affirming the duty liability and penalty imposed in the impugned order.