1999 (2) TMI 167 - AT - Central Excise

Summary

Issues: Classification of manufactured product, eligibility for exemption under Notifications, applicability of extended period for duty demand

Classification of manufactured product:
The case involved the appellants purchasing duty paid plain rolls and converting them into grooved (machined) rolls classified as rolls for metal rolling mills. The department argued that the resultant product was classifiable under sub-heading 8455.00, attracting central excise duty. The tribunal found that the processes carried out by the appellants changed the name, character, and use of the product, creating a new excisable commodity falling under sub-heading 8455.00. The tribunal referenced relevant case law to support their decision, emphasizing that the plain rolls transformed into rolls for metal rolling mills only after the processes carried out by the appellants.

Eligibility for exemption under Notifications:
The tribunal analyzed the applicability of Notification No. 281/86 and No. 217/86 to the machined rolls. They concluded that the machined rolls were not eligible for the benefit of Notification No. 281/86 as they were not shown to be used for repairs and maintenance of machinery in the appellants' factory. Additionally, the tribunal determined that Notification No. 217/86 could not be applied as the goods fell under excluded items used for the production of final products.

Applicability of extended period for duty demand:
Regarding the extended period for duty demand, the tribunal addressed the issue of alleged suppression by the appellants in not disclosing the quantity of machined rolls in statutory records. They found that while the department confirmed the demand based on the director's statement, there was evidence that the department was aware of the clearance for captive consumption of a certain quantity of rolls. The tribunal upheld the duty demand on 215 machined rolls under the extended period but set aside the demand on 10 machined rolls for which disclosure had been made earlier. The penalty imposed was upheld based on the established contravention of rules.

In conclusion, the tribunal upheld the duty demand on 215 machined rolls, set aside the demand on 10 machined rolls, and directed the re-quantification of duty by the jurisdictional Assistant Collector. The penalty was justified and upheld due to the contravention of rules.