1987 (1) TMI 381 - AT - Central Excise

Summary

Issues:
1. Whether the process of powdering dry ink dopes amounts to manufacture under the Central Excises and Salt Act, 1944.
2. Whether the appellants were liable to pay duty for manufacturing a product falling under Item No.14-I(i)(ii) of the Central Excise Tariff.
3. Whether the demand against the appellants is within the period of limitation.
4. Whether the demand for excise duty can be made retrospective.

Analysis:

1. The appellants sought clarification from the jurisdictional Superintendent of Central Excise regarding the powdering process of dry ink dopes and its classification as "manufacture." The Superintendent initially opined that the process did not amount to manufacture and was not excisable. However, subsequent actions by the appellants led to a show cause notice being issued, alleging contravention of Central Excise Rules by clearing a product under a specific tariff item without compliance. The Collector of Central Excise upheld the duty liability and imposed a penalty, which was challenged in the appeal.

2. The appellants argued that there was no suppression of facts or misstatement in the show cause notice, and the demand for duty should not have retrospective effect beyond the permissible limitation period. Citing relevant case laws, the appellants contended that the demand should be limited to a maximum of six months prior to the show cause notice date. The issue of limitation was raised, and the retrospective demand was challenged based on legal grounds.

3. The Tribunal examined the period of limitation and the provisions of Section 11A of the Central Excises and Salt Act, 1944. It was noted that the show cause notice did not contain allegations of fraud, misstatement, or suppression of facts that would warrant an extension of the limitation period beyond six months. The argument that the question of limitation was not raised before the Collector was rejected, emphasizing that all relevant facts were presented for consideration.

4. Referring to a previous judgment, the Tribunal considered whether the demand for excise duty could be made retrospective. In line with the precedent, it was determined that duty under a specific tariff item should be charged from the date of the show cause notice and not earlier. Given the circumstances and the consistent application of duty under a different tariff item, the demand for duty was held enforceable from the show cause notice date. Consequently, the penalty imposed was set aside, and the appeal was allowed on those terms.