1998 (7) TMI 274 - AT - Central Excise

Summary

Issues: Classification of goods under Tariff sub-headings, whether transfer of goods constitutes a sale, applicability of duty, limitation period for demand of duty, entitlement to Modvat credit, confiscation of plant and machinery, imposition of personal penalty.

Classification of Goods under Tariff Sub-headings:
The case involved a dispute over the classification of goods transferred from one factory to another. The main issue was whether the goods transferred by the appellants to their factory at Chembur should be classified under Tariff sub-heading 2001.90, as argued by the appellants, or under sub-heading 2001.10, as contended by the Revenue. The Tribunal noted the relevant sub-headings and examined the nature of the goods involved to determine the correct classification.

Transfer of Goods and Sale Controversy:
The question of whether the transfer of goods between the two factories constituted a sale was a crucial point of contention. The appellants argued that since the transfer involved the same entity, it could not be considered a sale, and therefore, the goods should fall under Tariff sub-heading 2001.90. The appellants relied on the definition of sale under the Central Excise Act and cited relevant case law to support their position. However, the Revenue maintained that the transfer should be treated as a sale, as previously determined by the Commissioner (Appeals) in a prior case. The Tribunal upheld the previous decision, concluding that the goods should be classified under Tariff sub-heading 2001.10.

Limitation Period and Duty Demand:
Regarding the demand for duty, the Tribunal found that the demand was made within the permissible limitation period of six months. The show cause notice for duty dated 13-10-1988 covered the period from 1-4-1988 to 5-10-1988, and the Tribunal deemed the demand for duty during this period as valid.

Entitlement to Modvat Credit:
The appellants raised a new plea concerning Modvat credit for the Chembur Unit, which was not previously addressed. The Tribunal advised that if the appellants met the requirements of the Modvat Rules, except for filing the Modvat declaration, the authorities should consider granting them the benefit of Modvat credit if eligible.

Confiscation of Plant and Machinery, Personal Penalty:
The Tribunal addressed the issue of confiscation of plant and machinery and the imposition of a personal penalty. It noted that since the matter was still under consideration by higher authorities and involved disputed legal questions, there was no basis for confiscation or penalty. The Tribunal set aside the confiscation and redemption fine, as well as the personal penalty imposed.

Conclusion:
In conclusion, the Tribunal dismissed the appeal, affirming the classification of goods under Tariff sub-heading 2001.10 and the demand for duty within the limitation period. It also provided guidance on the potential entitlement to Modvat credit and ruled against the confiscation of plant and machinery and the imposition of a personal penalty. The appeal was disposed of accordingly.