1998 (10) TMI 227 - AT - Central Excise

Summary

Issues:
- Classification of 'ANFO' under Central Excise Duty
- Whether the mixture amounts to 'manufacture' under Section 2(f)
- Applicability of duty on 'ANFO'
- Time-bar for demanding duty

Classification of 'ANFO' under Central Excise Duty:
The appeal involved a dispute regarding the classification of 'ANFO', a mixture of Ammonium Nitrate and Fuel Oil used for blasting operations in mines, under Central Excise Duty. The appellants contended that the mixture did not qualify as 'goods' for excise duty purposes and, therefore, no duty formalities were observed. However, the Department's view was that 'ANFO' became excisable under Chapter 36 post the new tariff introduction, and hence, was chargeable to duty.

Whether the mixture amounts to 'manufacture' under Section 2(f):
The appellants argued that the simple physical mixing of Ammonium Nitrate and Fuel Oil to create 'ANFO' did not constitute 'manufacture' as per Section 2(f) of the law. They believed that this process did not attract duty liability. The appellants relied on previous court decisions to support their contention.

Applicability of duty on 'ANFO':
The Department emphasized that 'ANFO' became chargeable to Central Excise Duty under Chapter 36 after the new tariff introduction. They pointed out that no exemption had been issued post 28-2-1986, making the item liable for duty. The Department also highlighted the alleged suppression of facts by the appellants regarding classification lists and price lists.

Time-bar for demanding duty:
The Tribunal considered the issue of time-bar for demanding duty from the appellants. It was noted that prior to the Circular by the Central Board of Excise & Customs and subsequent Trade Notices, no duty was demanded from the appellants. The Tribunal found that there was a reasonable belief held by the appellants that the product was non-dutiable even after the new tariff introduction. Consequently, the Tribunal held that the extended period of time was not available to the Department for demanding duty, and the demand was time-barred. Therefore, the appeal was allowed on time-bar grounds without delving into the merits of the case.

This judgment primarily focused on the classification of 'ANFO' under Central Excise Duty, the interpretation of 'manufacture' under Section 2(f), the applicability of duty on 'ANFO', and the time-bar for demanding duty. The Tribunal ruled in favor of the appellants, concluding that the demand for duty was time-barred due to the appellants' reasonable belief in the non-dutiable nature of the product even after the new tariff introduction.