1998 (12) TMI 268 - AT - Central Excise

Summary

Issues:
1. Exemption from duty for aluminium pipes under Notification 180/88.
2. Withdrawal of duty exemption for billets under Notification 180/88.
3. Allegation of suppression of facts leading to extended period under Section 11A.
4. Marketability of aluminium billets.
5. Bar of limitation for issuing notice.
6. Valuation of goods for Modvat credit.
7. Availability of Modvat credit for duty paid on ingots.

Analysis:
1. The appellant manufactured aluminium pipes exempted from duty under Notification 180/88. The issue arose when the duty exemption for billets under the same notification was withdrawn, and the appellant failed to pay duty on billets used in manufacturing pipes. A notice was issued demanding duty for the period when the exemption was withdrawn, invoking the extended period under Section 11A due to alleged suppression of facts.

2. The argument that the billets were not marketable as they were not sold was rejected. Marketability is not solely determined by sale but also by the capability of goods to be sold. The contention that finishing operations were needed for marketability was not proven. The predominant material in the ingots was not shown to be something other than aluminium.

3. The contention that the notice was barred by limitation due to prior disclosure of manufacturing ingots was dismissed. The classification list did not clearly indicate the use of ingots in manufacturing exempted goods, hence not calling for interference.

4. Regarding Modvat credit, the valuation of billets for captive consumption was determined by applying Rule 6(b)(ii) of the Valuation Rules. The appellant's argument to exclude duty on raw materials from the cost of manufacture was rejected based on a Supreme Court judgment. The availability of Modvat credit for duty paid on ingots towards billets was left unresolved and remanded to the Commissioner for decision.

5. The Tribunal held that duty was payable on the billets but remanded the matter to the Commissioner for determining the Modvat credit issues and the actual duty payable according to law. The appeal was allowed, and the impugned order was set aside.