2013 (6) TMI 298 - AT - Central Excise

Processed and woolen fabrics of wool come into existence during the course of manufacture of blanket - benefit of captive consumption Notification No. 67/95 denied - duty demand alonwith penalty of identical amount - assessee contested against invoking of extended period of limitation - Held that - The revenue has not shown any malafide suppression or mis-statement on the part of the assessee. Further, revenue is also expected to know that in a unit manufacturing blanket, the blanketing in running length would invariable come into existence. As such in the absence of any evidence to reflect upon the appellant s malafide intention, demand confirmed by invoking the longer period of limitation is unsustainable - in favour of assessee.

Summary

Issues:
1. Applicability of Notification No. 67/95 regarding duty on woolen fabrics during blanket manufacturing.
2. Justification of duty demand on intermediate goods.
3. Claim of credit for duty on intermediate product.
4. Validity of demand based on limitation period.

Analysis:
1. The judgment addressed the issue of duty confirmation against the appellant along with penalty due to the manufacturing process involving woolen fabrics during blanket production. The appellant argued that the benefit of captive consumption Notification No. 67/95 applied only to Basic Excise Duty, not Additional Duty under the Goods of (Special Importance) Act, 1957. The duty was raised through a show cause notice proposing confirmation for the period 1994-95 to 1997-1998.

2. The appellant contended that the intermediate goods produced were not marketable as they were further processed into blankets. They argued that any duty on the intermediate product could be utilized as credit for the final product's duty discharge. Additionally, the demand for duty was challenged on grounds of limitation.

3. The tribunal found that the appeal could be resolved based on the limitation issue alone. It noted the absence of evidence indicating malafide intention or suppression by the assessee. Considering that the production of blanketing in running length was inherent in blanket manufacturing units, the demand based on an extended limitation period was deemed unsustainable.

4. Consequently, the tribunal set aside the impugned order and allowed the appeal in favor of the appellant, providing consequential relief. The judgment highlighted the importance of evidence of malafide intent for invoking longer limitation periods and emphasized the need for revenue authorities to consider industry-specific processes while assessing duty demands.