2001 (7) TMI 711 - AT - Central Excise

Summary

Issues: Classification of goods, liability to duty, limitation period, penalty imposition, valuation method, availability of Modvat credit, limitation defense, brand name affixation, penalty redetermination.

Classification of Goods:
The case involved eight job workers manufacturing goods supplied by a company. The issue was the classification of the goods as fittings for running water gutters. The job workers did not pay duty on these goods, leading to a demand notice for duty and penalty. The manufacturers claimed classification under sub-heading 3926.90 or Heading 39.25, while the Commissioner classified them under Heading 39.17. The Tribunal found that the goods were properly classifiable as fittings for gutters under sub-heading 3925.99, rejecting the Commissioner's classification under Heading 39.17.

Liability to Duty and Limitation Period:
The manufacturers contended that the demands were barred by limitation, but the Tribunal found no evidence to support this claim. The Tribunal also clarified that the benefit of Notification 1/93-C.E. would not be available to the goods. The duty liability was to be redetermined, considering Modvat credit availability, and failure to file a declaration under Rule 57A was not a bar for availing credit.

Valuation Method and Modvat Credit:
The manufacturers argued for valuation based on the cost of manufacture, while the Commissioner arrived at a different value by deducting elements from the sale price. The Tribunal remanded the matter for redetermination based on the cost of manufacture, allowing evidence from both sides. It was clarified that Modvat credit should be considered, subject to proof of duty payment and utilization of such products in the final goods.

Brand Name Affixation and Penalty Imposition:
The manufacturers affixed the brand name of the raw material supplier on the goods, leading to a penalty imposition under Section 11AC equal to the duty evaded. The Tribunal found that the presence of the brand name was a conscious action by the manufacturers, rejecting the claim that it was unintentional. The penalty was to be redetermined based on the gravity of the offense and the duty amount evaded.

Conclusion:
The appeals were disposed of, and the Commissioner was directed to adjudicate afresh on the classification, valuation, Modvat credit, limitation defense, and penalty imposition issues based on the Tribunal's findings and directions.