1999 (5) TMI 202 - AT - Central Excise

Summary

Issues:
Manufacture of Aluminium Plates, Sheets, Strips, Slug, and Circles; Allegations of duty evasion and penalties; Demand for duty payment; Classification of products as intermediate; Limitation period for demand; Knowledge of department regarding manufacturing process.

Manufacture of Aluminium Plates, Sheets, Strips, Slug, and Circles:
The appellants manufactured Aluminium Plates, Sheets, Strips, Slug, and Circles. The issue arose when Aluminium circles were cleared without payment of duty, and it was alleged that Aluminium plates, an intermediate product, should have discharged duty before being consumed in the manufacture of circles. A show cause notice was issued alleging suppression of the fact of manufacturing plates to evade duty payment.

Allegations of Duty Evasion and Penalties:
The duty amounting to Rs. 2,40,44,230.85 was demanded for the period from 16-1-1986 to 30-6-1990. Additionally, a penalty of Rs. 2.00 lacs was imposed on the assessees. The Collector confirmed the duty and further amount based on the value of production of plates exceeding limits set out in a notification.

Demand for Duty Payment:
The appellants challenged the demand on the grounds of limitation and departmental knowledge. The department was accused of being aware of the manufacturing process of plates as an intermediate product during the period in question, thus rendering the demand hit by limitation. The appellant argued that the department had approved the classification lists highlighting the emergence of plates.

Classification of Products as Intermediate:
The ld. Collector analyzed the argument of limitation and observed that the department lacked awareness of plates emerging as intermediate products during the manufacture of circles. However, the classification lists filed by the appellants clearly outlined the manufacturing process, indicating the existence of plates and sheets as intermediate products. The Collector's reliance on separate definitions of plates and sheets during specific periods was deemed immaterial.

Limitation Period for Demand:
The process of manufacturing narrated in the classification lists revealed that plates and sheets were intermediate products before the circles were cut. The department's knowledge of this fact, as declared by the appellants in the lists, negated the charges of suppression and misdeclaration. Consequently, the extended period for demand was not sustainable, and the demand confirmed before a specific date was held to lack factual support.

Knowledge of Department Regarding Manufacturing Process:
The department's awareness of the manufacturing process, as evidenced by the classification lists, was crucial in determining the validity of the demand for duty payment. The appellants had consistently declared plates and sheets as intermediate products during the manufacture of circles, indicating the department's knowledge of the process. The appeal succeeded based on these grounds, leading to the setting aside of the impugned order and granting of consequential relief.

This comprehensive analysis of the legal judgment highlights the issues involved, arguments presented, and the final decision rendered by the Appellate Tribunal CEGAT, Mumbai.