2002 (9) TMI 160 - AT - Central Excise

Summary

Issues Involved:
1. Benefit of Notification No. 24/91.
2. Suppression of facts.
3. Duty on hollow blocks.
4. Penalty.

Summary:

A. Benefit of Notification No. 24/91:

The appellants argued that Notification No. 24/91 does not distinguish between cement produced from their own clinker and clinker purchased from outside. The Tribunal observed that the notification exempts duty for portland cement manufactured by a factory using a vertical shaft kiln and does not specify that the clinker must be produced in the same factory. The Tribunal noted that a similar issue had been decided in favor of the appellants in their own case previously. Therefore, the benefit of the notification cannot be denied merely because the factory used clinker purchased from outside along with their own clinker. The benefit of the notification was allowed to the appellants.

B. Suppression of facts:

The appellants contended that there was no suppression of facts and that the shortage of clinker was not indicative of clandestine manufacture of cement. The Tribunal observed that there was acceptable evidence of removal of cement and use of clinker purchased from outside, supported by statements from the appellants' employees. The Tribunal found that the appellants had shown excess removal of limestone and other raw materials, indicating suppression of production and clearance of cement. The Tribunal rejected the appellants' plea and upheld the longer period of limitation for the demand of duty.

C. Duty on hollow blocks:

The appellants claimed that hollow blocks used for constructing a compound wall were exempt from duty under Notification No. 59/90. The Tribunal found evidence that the hollow blocks were manufactured at the site and accepted the appellants' plea for exemption. However, the Tribunal noted that the appellants had suppressed the diversion of 838 bags of cement for manufacturing hollow blocks and upheld the department's allegation of suppression.

D. Penalty:

The Tribunal observed that the penalty under Section 11AC could not be imposed as it came into force after the period involved in the case. The Commissioner had imposed a combined penalty under Rule 173Q and Section 11AC without apportioning the amount. The Tribunal set aside the penalty, following the decision in Punjab Recorder Ltd. v. CCE.

Conclusion:

1. Duty of Rs. 1,68,191/- demanded on account of denial of benefit of Notification No. 24/91-C.E., dated 25-7-91 is set aside.
2. Duty of Rs. 19,599.77 demanded on the hollow blocks manufactured is also set aside.
3. The entire penalty of Rs. 23,04,994/- imposed under Rule 173Q read with Section 11AC of the C.E. Act, 1944 is set aside.
4. The rest of the duty demand of Rs. 21,17,204/- is confirmed.