1998 (5) TMI 214 - AT - Central Excise

Issues:
1. Duty demand particulars and penalty amount.
2. Marketability of the material.
3. Limitation period for duty demand.
4. Claim for exemption under Notification No. 10/96.
5. Central Excise Registration and classification list non-compliance.

Analysis:
1. The duty demand particulars and penalty amount were presented in a table format, outlining the period, show cause notice dates, duty amounts, and penalty figures for each appeal. The appellant argued that the material in question, used in manufacturing 'Gutkha,' was not marketable as it had a short shelf life and was not intended for sale. The appellant relied on precedents to support their stance that inter-departmental transfers do not establish marketability. They also highlighted their disclosure to the department regarding the non-marketability of the product during the relevant period, invoking the Supreme Court's ruling on limitation periods for duty demands.

2. The marketability of the material was a key point of contention. The appellant contended that the material used in manufacturing 'Gutkha' was not marketable due to its short shelf life and specific processing methods. They argued that the transfer of material between their units did not constitute a sale, emphasizing that the material was not intended for commercial purposes. The appellant referenced a Tribunal decision and a High Court judgment to support their position that the material was not comparable to marketable goods like chewing tobacco.

3. The limitation period for duty demand was another issue raised. The appellant asserted that their disclosure to the department regarding the non-marketability of the product during the relevant period should preclude the application of the extended limitation period. They referenced a Supreme Court judgment to argue against willful suppression by the department and emphasized their bona fide belief that the goods were not marketable.

4. The claim for exemption under Notification No. 10/96 was brought up during the proceedings. The appellant claimed exemption under this notification, stating that the goods were consumed captively in the manufacturing process of 'Gutkha.' However, the claim for exemption was made belatedly, and the Commissioner had not had the opportunity to consider it before passing the impugned order. The Tribunal found a prima facie case for granting stay regarding the demands related to this claim.

5. Non-compliance with Central Excise Registration and classification list requirements was highlighted by the Respondent. The Respondent pointed out that the appellant had not obtained Central Excise Registration for the material in question and had not filed a classification list. The Commissioner found total suppression of facts by the appellant and relied on evidence indicating that the material was excisable and marketable, based on transactions with their sister unit.

In conclusion, the Tribunal granted a stay on the demands related to the claim for exemption under Notification No. 10/96, considering the belated submission of the claim. For the other appeals, the Tribunal directed the appellant to deposit a specified amount pending further proceedings, acknowledging the arguable nature of the excisability issue and the limitations on extending the demand period. The matter was scheduled for compliance review on a specified date.

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