1998 (8) TMI 225 - AT - Central Excise

Summary

Issues:
Classification of purified Naphthalene under CET sub-heading 2902.00, time limitation for raising demand, whether purification of naphthalene amounts to manufacture, intention to evade payment of duty.

Classification Issue:
The Collector of Central Excise upheld the classification of purified Naphthalene under CET sub-heading 2902.00 due to the crystalizing point range meeting the requirement specified in the HSN Explanatory notes. A duty demand of Rs. 98,103 was confirmed for the period 1986-87 against the appellants, who were job workers purifying crude naphthalene. A penalty of Rs. 25,000 was also imposed for contravention of Central Excise Rules.

Time Limitation Issue:
The appellants contended that the demand raised by the show cause notice was time-barred for the period from 28-2-1986 to 31-5-1987. They argued that their declaration in April 1986 clearly stated their purification process, which was endorsed by the Inspector of Central Excise. The appellants believed that purification did not amount to manufacture, and hence, they were not required to follow certain procedures. The department claimed that the appellants did not disclose their purification activity, allowing an extended period of limitation.

Manufacture Intention Issue:
The appellants maintained that their purification activity was known to the department based on the declaration and their belief that purification did not constitute manufacturing. The Tribunal agreed with the appellants, finding no intent to evade duty, and held that the demand was time-barred. Consequently, the impugned order was set aside, and the appeal was allowed.