2001 (2) TMI 631 - AT - Central Excise

Issues Involved:
1. Demand of duty on High Impact Polystyrene (HIP) sheets.
2. Imposition of personal penalty on M/s. Creative Wares Ltd.
3. Imposition of penalty on M/s. Indian Plastics Federation.
4. Demand of interest under Section 11AB.
5. Confiscation of HIP sheets and redemption fine.
6. Classification of HIP sheets.
7. Extension of Modvat credit.
8. Limitation period for issuing the show cause notice.

Issue-wise Detailed Analysis:

1. Demand of Duty on HIP Sheets:
The primary issue revolves around the excisability of HIP sheets arising during the manufacture of disposable cups and glasses. The Revenue alleged that these intermediate products were dutiable as they were consumed captively by the appellants. The appellants contended that these sheets were not marketable as they were in a semi-finished state, lacked anti-static treatment, and were not in a saleable condition. The Tribunal noted that the onus to prove marketability lies on the Revenue, which failed to provide affirmative evidence. The matter was remanded to the Commissioner for a fresh decision on the marketability and excisability of the sheets, taking into account the technical data and expert opinions provided by the appellants.

2. Imposition of Personal Penalty on M/s. Creative Wares Ltd.:
The Commissioner had imposed a personal penalty equivalent to the duty amount under Section 11AC of the Central Excise Act, 1944. The Tribunal observed that Section 11AC, which came into effect on 28-9-1996, cannot have retrospective effect. Consequently, the imposition of the personal penalty was set aside.

3. Imposition of Penalty on M/s. Indian Plastics Federation:
The Federation was penalized under Rule 209A of the Central Excise Rules, 1944, for allegedly aiding the first appellant by providing an opinion on the excisability of the intermediate product. The Tribunal found no justification for this penalty, as the Federation's actions did not reflect any fraudulent intent. The penalty on the Federation was fully set aside.

4. Demand of Interest under Section 11AB:
Interest was demanded from the first appellant under Section 11AB of the Central Excise Act, 1944. The Tribunal set aside this demand, as Section 11AB cannot be applied retrospectively.

5. Confiscation of HIP Sheets and Redemption Fine:
The Commissioner had confiscated 104 rolls of HIP sheets and imposed a redemption fine. The Tribunal found no justification for this action, given the earlier favorable order for the appellants and the time-barred nature of the major part of the demand. The confiscation and redemption fine were set aside.

6. Classification of HIP Sheets:
The appellants argued that if the HIP sheets were deemed excisable, they should be classified under sub-heading 3926.90, which would make them exempt from duty under various notifications. The Tribunal directed the Commissioner to consider this classification issue during the remand proceedings.

7. Extension of Modvat Credit:
The appellants sought Modvat credit for the duty paid on the granules used to manufacture the HIP sheets. The Tribunal held that if the demand of duty is confirmed, the appellants should be granted Modvat credit, regardless of whether the procedural requirements were followed.

8. Limitation Period for Issuing the Show Cause Notice:
The Tribunal addressed the limitation issue, noting that the show cause notice was issued beyond the normal six-month period. The earlier adjudication had already considered the excisability of the HIP sheets, and no new facts or legal changes justified the extended period. Consequently, the demand for the period beyond six months was set aside.

Conclusion:
The appeal of M/s. Creative Wares Ltd. was allowed concerning the limitation, penalty, interest, and confiscation issues. The matter was remanded to the Commissioner for a fresh decision on the marketability and excisability of the HIP sheets. The appeal of M/s. Indian Plastics Federation was allowed in toto.

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