1999 (4) TMI 316 - AT - Central Excise

Summary

Issues:
1. Duty liability in respect of diluted aluminium paint used for painting empty drums.
2. Applicability of the proviso to Section 11A(1) of the Central Excises Act, 1944.
3. Interpretation of duty liability for diluted aluminium paint based on marketability and shelf life.
4. Consideration of duty liability for aluminium powder floor sweepings used in the preparation of paint.
5. Question of limitation in disclosing the use of floor sweepings for manufacturing paint.
6. Decision on the demand for central excise duty and penalty imposed.

Analysis:
1. The appeal concerned the duty liability of M/s. Aluminium Powder Co. Ltd. for diluted aluminium paint used to coat empty drums for packing metal powder. The central excise duty was demanded for both aluminium powder and paint. The appellant accepted liability for powder but contested duty on paint due to its limited shelf life and non-marketability.

2. The Addl. Collector held the paint dutiable, citing the mixing of aluminium powder, varnish, and turpentine for paint use. The proviso to Section 11A(1) of the Central Excises Act, 1944 was deemed applicable in this case.

3. The appellant argued that the diluted paint, not sold in the market, should not attract duty. Reference was made to a previous Tribunal decision supporting the non-dutiable nature of such paint with a short shelf life.

4. The Tribunal agreed with the appellant's contention, emphasizing that the prepared diluted paint was not marketable and had a short shelf life. The duty liability was confirmed only for the aluminium powder floor sweepings used in the paint preparation.

5. Regarding the limitation issue, it was noted that the appellant did not disclose the use of floor sweepings before the visit of officers, leading to a penalty reduction from Rs. 1,500 to Rs. 500. No evidence was presented to challenge this finding.

6. The Tribunal set aside the duty demand for the diluted aluminium paint but confirmed it for the aluminium powder floor sweepings. The penalty was reduced, and the appeal was partly allowed based on the specific circumstances of the case.

This detailed analysis of the judgment highlights the key issues, arguments presented, legal interpretations, and the final decision rendered by the Tribunal.