1999 (9) TMI 162 - AT - Central Excise

Issues:
1. Eligibility for benefit under Notification No. 214/86-C.E.
2. Allegations of misdeclaration and suppression of facts.
3. Failure to file classification lists and price lists.
4. Confiscation of assets and imposition of penalty.
5. Aspect of limitation regarding the Show Cause Notice.

Eligibility for benefit under Notification No. 214/86-C.E.: The applicants were involved in manufacturing insulated wires and cables, specifically paper covered copper strips for M/s. B.H.E.L. The issue arose when a Show Cause Notice was issued, questioning the eligibility of the goods for the benefit of Notification No. 214/86-C.E. The notice alleged that a distinct product was manufactured, the identity of the raw material was lost due to additional inputs used, and the value of these inputs was recovered along with labor charges. The Commissioner confirmed the duty amount and imposed penalties, leading to an appeal and a stay application by the applicants. The Tribunal analyzed the Notification, which exempts goods manufactured on a job work basis, allowing for a distinct product to be manufactured with an identity separate from the raw material. The Tribunal found no prohibition on using additional inputs or recovering their value from the principal manufacturer. Consequently, the Tribunal granted an unconditional stay and waiver of pre-deposit of duty and penalties until the appeal proceedings were concluded.

Allegations of misdeclaration and suppression of facts: The Show Cause Notice alleged misdeclaration and suppression of facts by the applicants, leading to short-levied duty and penalties. The applicants argued that similar allegations were made in a previous Show Cause Notice in 1994, which was later withdrawn after the applicants filed a Writ Petition in the Bombay High Court. The Tribunal noted the department's knowledge of the facts regarding the use of additional inputs and recovery charges in the earlier notice, indicating a lack of basis for the allegations in the 1998 notice. Considering the arguments presented, the Tribunal found prima facie merit in the submissions and granted the stay and waiver of pre-deposit of duty and penalties until the appeal proceedings were finalized.

Failure to file classification lists and price lists: The Show Cause Notice also accused the applicants of failing to file classification lists and price lists as required under the Central Excise Rules, 1944. This non-compliance was cited as a basis for determining the livable duty and imposing penalties. However, the Tribunal's decision primarily focused on the eligibility for benefits under the Notification and the allegations of misdeclaration and suppression of facts, leading to the grant of the stay and waiver of pre-deposit.

Confiscation of assets and imposition of penalty: The impugned order by the Commissioner of Central Excise confirmed the duty amount, imposed penalties under Section 11AC of the Central Excises Act, 1944, and ordered the confiscation of assets used in connection with manufacturing. The applicants appealed this decision and sought a waiver of pre-deposit and stay of recovery of duty and penalties. The Tribunal, after considering the submissions and the Notification's provisions, granted the stay and waiver, allowing the applicants to utilize their assets during the appeal proceedings subject to certain conditions.

Aspect of limitation regarding the Show Cause Notice: The Tribunal also examined the aspect of limitation concerning the Show Cause Notice, which alleged suppression and misdeclaration by the applicants. The applicants presented a Writ Petition filed in 1994 and subsequent withdrawal of the same, indicating a prior instance where similar allegations were made and later retracted. The Tribunal found merit in the arguments regarding the limitation aspect, leading to the grant of an unconditional stay and waiver of pre-deposit until the appeal proceedings concluded.

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