1999 (12) TMI 447 - AT - Central Excise

Summary

Issues:
1. Duty demanded on conversion of aluminium scrap into powder.
2. Invocation of extended period under Section 11A.
3. Financial hardship claimed by the appellant.
4. Dispute over classification of the manufactured product.
5. Liability of duty and penalty on partners of the partnership firm.
6. Justification for waiver of deposit of duty and penalty.

Analysis:

1. The duty was demanded based on the conversion of aluminium scrap into powder classified under Heading 76.03 of the tariff without payment of duty. The extended period under Section 11A was invoked due to non-declaration of this activity.

2. The appellant argued that the scrap received was mainly used directly in the manufacturing process, except for aluminium sheets which needed melting down. They contended that no powder emerged, and the size of the reduced particles did not meet the specified requirements. They also highlighted the allowance of Modvat credit and the sale of scrap in its received form, reducing the duty liability to approximately Rs. 6.00 lacs.

3. The departmental representative presented evidence suggesting the manufacture of powder and the technological advantages of using powdered metal in ferro alloy production. Financial hardship was disputed, and the claim was not accepted by the Tribunal.

4. The Tribunal found it challenging to accept the claim of financial hardship, especially as the liability for duty and penalty would extend to each partner of the partnership firm. The variation in the size of the samples presented did not convincingly support the appellant's argument regarding the necessity of reducing only one type of scrap.

5. While acknowledging potential benefits of using powder in manufacturing ferro alloys, the Tribunal noted the lack of evidence to justify the classification of the product under Heading 76.03. The duty liability was recalculated to be approximately Rs. 8.00 lacs, and the appellant was directed to deposit Rs. 15.00 lacs within two months, with the remaining amount waived.

6. In conclusion, the Tribunal directed compliance with the deposit requirement by a specified date, emphasizing the need to address the duty and penalty obligations promptly.