1999 (9) TMI 263 - AT - Central Excise

Summary

Issues:
1. Duty demand confirmation based on manufacturing activity.
2. Time bar for issuing show cause notices.
3. Independent manufacturing activity by contractors.
4. Application of Tribunal judgment in similar cases.
5. Waiver of pre-deposit and stay applications.

Issue 1: Duty demand confirmation based on manufacturing activity:
The judgment deals with three stay applications arising from duty demands confirmed by the Collector of Central Excise for manufacturing PCC slabs/blocks. The duty demands were made under Rule 9(2) of C.E. Rules read with proviso to sub-section (1) of Section 11A of C.E. Act. The appellants argued that manufacturing was carried out independently by contractors on a principal to principal basis, as per agreements with the Executive Engineer. They contended that demands could not be confirmed on them as all details were furnished earlier, and the show cause notices were time-barred. The Tribunal found that the manufacturing activity was indeed carried out by contractors independently, and demands should have been raised on them, not the appellants. The appeals were allowed on this ground.

Issue 2: Time bar for issuing show cause notices:
The appellants argued that the show cause notices issued were time-barred as all details were furnished earlier. The Tribunal agreed, noting that details of contracts and manufacturing activities were provided to the department in 1989. The show cause notices issued after a significant lapse of time were deemed time-barred. The Tribunal emphasized that when all relevant details were known to the department, issuing show cause notices later was not justified.

Issue 3: Independent manufacturing activity by contractors:
The judgment highlighted that the manufacturing activity of PCC slabs/blocks was carried out independently by contractors on a principal to principal basis. The contracts awarded to the contractors clearly indicated this independent manufacturing arrangement. The Tribunal scrutinized the terms of the contracts and found them identical to those examined in a previous case involving the TNEB. The department was directed to accept the contractors as responsible for the discharge of Excise Duty, as the work was done independently by them.

Issue 4: Application of Tribunal judgment in similar cases:
The Tribunal applied the ratio of a previous judgment in the case of TNEB to grant waiver of pre-deposit and stay applications in the present cases. The Tribunal found that the issue in the current cases was identical to that in the TNEB case, and hence, the waiver was granted based on the precedent set by the earlier judgment.

Issue 5: Waiver of pre-deposit and stay applications:
After considering the submissions and perusing the records, the Tribunal granted waiver of pre-deposit and stay its recovery by allowing the stay applications. The Tribunal accepted the prayer for disposal of the appeals based on the similarity of the issues with the TNEB case. The appeals were taken up for disposal and allowed based on the independent manufacturing activity by contractors, time-barred show cause notices, and the application of the Tribunal's previous judgment.

This detailed analysis of the judgment addresses the duty demand confirmation, time bar for show cause notices, independent manufacturing activity by contractors, application of precedent, and the grant of waiver of pre-deposit and stay applications.