1998 (4) TMI 355 - AT - Central Excise

Summary

Issues:
1. Misdeclaration and suppression of information leading to duty evasion.
2. Captive consumption of chemicals under specific notifications.
3. Knowledge of department regarding captive consumption.
4. Limitation plea based on classification list.
5. Marketability of Benzyl Cyanide for duty assessment.
6. Quantification of duty short levied.
7. Reversal of credit on duty-paid inputs.
8. Re-calculation of duty considering various factors.
9. Imposition of penalty based on deliberate misdeclaration.

Analysis:

1. The case involved allegations of misdeclaration and suppression of information by the appellants to evade duty on Benzyl Cyanide and Benzyl Chloride used for captive consumption under specific notifications. The Collector confirmed the duty demand except for a portion related to Benzyl Chloride used for manufacturing Benzyl Cyanide, imposing penalties on the appellants.

2. The appellants argued that the Benzyl Cyanide consumed was not marketable, and duty on it would affect Benzyl Chloride as well. They claimed that by-products cleared with duty payment entitled them to captive consumption benefits for Benzyl Cyanide and Benzyl Chloride. However, the Tribunal found no substantial difference between captively consumed and saleable Benzyl Cyanide, rejecting the marketability argument.

3. The Tribunal examined various documents, including classification lists and Modvat scheme declarations, to assess the department's knowledge of captive consumption. It concluded that the evidence provided did not support the appellants' claim that the department was aware of the captive consumption of chemicals without duty payment.

4. Addressing the limitation plea based on a classification list, the Tribunal noted discrepancies in the list, indicating a false claim by the appellants regarding the dutiable nature of final products. This finding strengthened the case of misdeclaration and suppression against the appellants.

5. Regarding the quantification of duty short levied, the Tribunal directed the Commissioner to re-calculate the duty considering factors like the value of packing, credit reversal on duty-paid inputs, and the use of Benzyl Cyanide in by-products cleared duty-free.

6. The Tribunal upheld the penalty imposition, citing deliberate misdeclaration and suppression as proven charges. It found the penalty justified based on the evidence and duty confirmed by the Collector, with no grounds for reduction at that stage.

7. In conclusion, the Tribunal upheld the Collector's order, subject to the re-calculation of duty by the Commissioner, emphasizing the need to consider various factors affecting duty assessment and penalty imposition in the case.