1998 (12) TMI 175 - AT - Central Excise

Summary

Issues:
1. Classification of job work activities for excise duty assessment.
2. Allegation of duty evasion due to non-inclusion of job work value.
3. Imposition of penalty under Rule 173Q for suppression of facts.
4. Question of limitation in invoking the larger period for show cause notice.

Issue 1: Classification of job work activities for excise duty assessment
The appellants, engaged in manufacturing machine parts and job work activities like machining, grinding, etc., claimed that job work done by them was not excisable. They did not include job charges in aggregate clearance computation, leading to a duty liability proposal by the Superintendent. The department alleged duty evasion for not clubbing own production and job work values, resulting in a show cause notice for duty evasion.

Issue 2: Allegation of duty evasion due to non-inclusion of job work value
A show cause notice was issued for duty evasion alleging non-inclusion of job work value, leading to short payment of excise duty. The notice claimed suppression of facts and indicated discrepancies in the value of raw material compared to job charges collected.

Issue 3: Imposition of penalty under Rule 173Q for suppression of facts
Upon adjudication, duty demand was confirmed based on the suppression of facts, and a penalty of Rs. one lakh was imposed under Rule 173Q for alleged evasion. The appellants appealed against this order.

Issue 4: Question of limitation in invoking the larger period for show cause notice
The appellants argued that all relevant information was disclosed to the department, including job work activities, prior to classification list submission. They contended that the show cause notice was time-barred as no facts were suppressed, and only a normal period of six months could be invoked. The Commissioner upheld the limitation issue, stating that the appellants failed to disclose all facts, leading to the setting aside of the limitation plea.

In conclusion, the Appellate Tribunal upheld the appellant's plea on the question of limitation, setting aside the demand of duty and penalty due to the show cause notice being time-barred. The tribunal found that the department should have understood the job work activities from the classification list, absolving the appellants from blame. Therefore, the appeal was allowed based on the limitation issue, overturning the duty demand and penalty imposed.