2000 (10) TMI 456 - AT - Central Excise

Issues Involved:
1. Limitation period for demand.
2. Identity of the manufacturer.
3. Compliance with notification conditions.
4. Computation errors in duty demand.
5. Confiscation of moulds and plant machinery.
6. Imposition of penalties.

Detailed Analysis:

1. Limitation Period for Demand:
Shri J.J. Bhatt argued that the demand for the extended period was barred by limitation, emphasizing that the facts were always known to the department. The correspondence between the department and M/s. MIL from 1987 onwards showed that the department was aware of the procedures and processes involved. The Tribunal accepted this plea, noting that the department had been repeatedly consulted on the movement of materials between M/s. MIL and M/s. SEW, and had even provided permissions under Rule 57F and Notification No. 214/86. The Tribunal concluded that the demand for the extended period was barred by limitation and thus, the confirmation of the demand and the imposition of penalties for the larger period did not sustain.

2. Identity of the Manufacturer:
The Tribunal examined various statements and evidence to determine whether M/s. SEW or M/s. MIL was the actual manufacturer of the moulds. Despite conflicting statements, the Tribunal found that the moulds were manufactured by M/s. SEW. The declarations made by M/s. MIL under the claims for benefit of the notification indicated that the final goods manufactured by M/s. SEW were "Moulds" falling under sub-heading 8480.00. The Tribunal held that the moulds were indeed manufactured by M/s. SEW, but noted that M/s. MIL paid the duty as required by the notification.

3. Compliance with Notification Conditions:
Shri J.J. Bhatt assured that M/s. MIL and M/s. SEW were operating under the benefit of the notification at the time of the visit by the officers. The Tribunal stated that the duty to be paid by M/s. SEW would depend on the extent of compliance with the conditions of the notification. If the goods cleared by M/s. SEW were duly received by M/s. MIL and either used captively or cleared on payment of duty, there may not be any duty leviable. This factual determination was remanded to the Jurisdictional authority.

4. Computation Errors in Duty Demand:
Shri J.J. Bhatt pointed out errors in the computation of the duty demand, specifically referring to Annexure B-I of the show cause notice where the sum total of the component parts amounted to 110%. The Tribunal acknowledged this issue and directed the Jurisdictional Assistant Commissioner to re-examine the computation.

5. Confiscation of Moulds and Plant Machinery:
The Tribunal noted that the 83 moulds seized from M/s. MIL were in fully manufactured condition and were confiscated based on the belief that they had been cleared without payment of duty. The Tribunal found that under the benefit of the notification, these goods could have been cleared from M/s. SEW to M/s. MIL. The Tribunal directed the Jurisdictional authority to verify whether the correct procedure had been followed for such transfer to release their liability to confiscation. Additionally, the Tribunal set aside the orders of confiscation of the plant and machinery since the bulk of the demand was found unsustainable.

6. Imposition of Penalties:
The Tribunal remitted the penalties imposed on all the appellants, including M/s. SEW, Shri J.M. Gandhi, Shri M.K. Gandhi, and Shri Maiya. The Tribunal directed the Jurisdictional Commissioner to reconsider the imposition of penalties within the scope of the remand while allowing the appellants to make due submissions.

Conclusion:
Accepting the plea of limitation, the Tribunal set aside the demand confirmed for the extended period and remitted the penalties imposed on all appellants. The Tribunal remanded the proceedings back to the Jurisdictional Commissioner for a determination on the demands made within the normal period and the liability to confiscation of the seized goods. The Commissioner was instructed to permit the appellants to make submissions and pass appropriate orders on the extent of duty confirmation and penalties. An early hearing was expected due to the significant time elapsed.

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