1997 (8) TMI 308 - AT - Central Excise

Summary

Issues: Classification of products under Central Excise Rules, suppression of material facts, time limitation for duty demand, imposition of penalty.

Classification of Products under Central Excise Rules:
The case involved a dispute regarding the classification of products under Central Excise Rules. The appellants were manufacturers of ACSR cables and were receiving duty-paid Aluminium Wire Rods, reducing their thickness to the required gauge of the cables. During this process, wires of 9 S.W.G. were also produced. The Department sought to charge duty on these wires under the same Tariff Item as cables. A show cause notice was issued to recover duty for a specific period, which was confirmed by the Commissioner of Central Excise. The Tribunal examined the submissions and held that the demand of duty on the 9 S.W.G. wires was time-barred as the process of manufacture was not declared, leading to a suppression of facts. The Tribunal emphasized that the Revenue should be aware of the manufacturing process before approving classification lists and price lists.

Suppression of Material Facts:
The issue of suppression of material facts was crucial in this case. The Department alleged that the appellants had not declared the manufacturing of the intermediate product, i.e., wires of 9 S.W.G., in their classification list under Rule 173B of the Central Excise Rules. This non-disclosure was considered as a case of suppression of material fact with the intention to evade duty payment. However, the Tribunal found that the Revenue should have been aware of the manufacturing process and could not claim ignorance before approving classification lists. Therefore, the Tribunal concluded that the demand for duty was time-barred due to the lack of disclosure.

Time Limitation for Duty Demand:
The Tribunal addressed the issue of time limitation for duty demand in this case. It held that the demand for duty on the wires of 9 S.W.G. was barred by time as the show cause notice had been issued beyond the stipulated period of six months. The Tribunal emphasized that the Revenue should have been aware of the manufacturing process and could not claim ignorance about it before approving classification lists. Therefore, the demand for duty was considered time-barred, and the imposition of a penalty was set aside.

Imposition of Penalty:
Regarding the imposition of a penalty, the Tribunal noted that the question of penalty did not arise in the circumstances of the case. As the demand for duty was found to be time-barred due to the lack of declaration of the manufacturing process, the Tribunal set aside the penalty of Rs. 5,000. The Tribunal concluded that the application of the Commissioner, which assumed ignorance on the part of the Revenue regarding the intermediate product, was incorrect. The Tribunal rejected the application, stating that the issue was not a question of law and could not be referred to the High Court.