1998 (5) TMI 189 - AT - Central Excise

Summary

Issues Involved:

1. Duty on Micro Cellular Rubber Sheets.
2. Duty on Rubber Waste and Scrap.
3. Limitation period for raising the demand.

Detailed Analysis:

1. Duty on Micro Cellular Rubber Sheets:

The Commissioner of Central Excise, Calcutta-I, confirmed a demand of Rs. 1,75,174.67 for Micro Cellular Rubber Sheets for the period from 5-2-1986 to 26-6-1986. The appellants argued that these sheets were exempt from Central Excise duty under Notification No. 71/68-C.E. until 28-2-1986, and subsequent amendments did not change the description of the goods, only the tariff heading. The Tribunal had previously ruled in favor of the appellants in Order No. 142/91-C.E., dated 7-2-1991, which was upheld by the Supreme Court. The Commissioner did not follow this precedent, but the Tribunal reaffirmed its earlier decision, setting aside the duty on Micro Cellular Rubber Sheets.

2. Duty on Rubber Waste and Scrap:

The demand for Rs. 12,281.00 for Rubber Waste and Scrap from 28-2-1986 to 25-6-1986 was contested by the appellants. They argued that waste and scrap arising during manufacturing do not constitute "manufacture" under Section 3 of the Central Excise Act, 1944. They cited the Tribunal's decision in Tansi Engineering Works and the Delhi High Court's decision in Modi Rubber Limited, arguing that mere classification under sub-heading 4004.00 does not make it excisable. The Tribunal, however, found that waste and scrap arising from the manufacturing process are indeed covered under Chapter Note 6 of Chapter 40, which defines "waste, parings, and scrap" as arising from the manufacture or working of rubber and rubber goods. The Tribunal concluded that these are excisable under Section 3 of the Central Excise Act, 1944.

3. Limitation Period for Raising the Demand:

The appellants contended that the demand was time-barred, as the show cause notice was issued on 16-3-1990 for the period from February 1986 to June 1986, beyond the six-month limitation period. They argued that the Central Excise Authorities were aware of their activities and had previously raised similar demands based on private pass-outs, which were held to be time-barred by the Tribunal in an earlier order dated 27-7-1990. The Tribunal agreed with the appellants, noting that the demand was raised after the six-month period and was thus barred by limitation.

Conclusion:

The Tribunal allowed the appeal in respect of Micro Cellular Rubber Sheets on both merits and limitation. For Rubber Waste and Scrap, the appeal was allowed on the ground of limitation. The impugned order was set aside in its entirety.