1998 (7) TMI 391 - AT - Central Excise

Rubber waste/scrap - Aluminium lasts whether purchased from market in fully manufactured condition - Excisability of

Summary

Issues Involved:
1. Excisability of rubber waste and scrap under sub-heading 4004.00.
2. Duty on Aluminium Lasts.
3. Duty on Paper Patterns.
4. Point of limitation for issuing show cause notices.
5. Imposition of penalty.

Excisability of Rubber Waste and Scrap:
The appellant argued that no Central Excise duty could be levied on rubber waste and scrap under sub-heading 4004.00 as no manufacturing process had taken place. They contended that the definition of "manufacture" in Section 2(f) of the Act required a specific process to be considered as such. The appellant cited various judicial decisions to support their argument. However, the Tribunal held that rubber waste and scrap were excisable under sub-heading 4004.00 based on a previous order in a similar case.

Duty on Aluminium Lasts:
The appellant claimed that they did not manufacture Aluminium Lasts but purchased them in a fully manufactured condition. They argued that no duty should be charged on these items as they were used, worn out, and sold as old items. The Tribunal noted a factual contradiction regarding the manufacture of Aluminium Lasts and suggested further verification by the jurisdictional Central Excise Authorities to resolve the issue.

Duty on Paper Patterns:
Regarding Paper Patterns, the appellant argued that these were simply cuttings of paper used for manufacturing leather or rubber sheets and wooden lasts. They contended that these patterns were not marketable goods and should not be levied with excise duty. The Tribunal agreed with the appellant, stating that Paper Patterns were not goods leviable to excise duty as they were used for captive consumption and not sold in the market.

Point of Limitation:
The appellant raised the point of limitation, arguing that the show cause notices were issued after the expiry of the statutory period and were thus barred by limitation under Section 11A(1). They claimed that there was no intent to evade duty, and the Department was aware of the relevant facts due to previous interactions. The Tribunal found merit in the appellant's argument, holding that the demand was indeed barred by limitation, and no penalty should be imposed.

Imposition of Penalty:
The appellant contested the imposition of a penalty, stating that they had operated with the consent of Central Excise Authorities who previously believed no duty was leviable on the items in question. The Tribunal, considering the issues of excisability, limitation, and lack of fraudulent intent, set aside the penalty along with the duty demands due to being barred by limitation.

In conclusion, the Tribunal allowed the appeal, set aside the impugned order, and provided consequential reliefs based on the findings related to excisability, duty on specific items, limitation, and penalty imposition.