2005 (7) TMI 193 - AT - Central Excise

Summary

Issues:
Manufacture with/without aid of power, Benefit of notifications, Shifting of goods inter unit, Denial of benefit of notification, Violation of principles of natural justice, Barred by limitation

Manufacture with/without aid of power:
The appellants were engaged in the manufacture of Electrical Switches, plugs sockets, etc. Out of 17 units, only five units were engaged in full-fledged manufacturing activities. The machines used for moulding were operated manually, with electric power used only for heating the plastic moulding powder. The issue revolved around the use of power in the manufacturing process and the denial of benefits of certain notifications. The Chartered Engineer's certification supported the claim that electric power was only used for heating the moulds, not for the manufacturing process itself. The Tribunal found that the use of power for heating the moulds did not disqualify the exemption as per relevant Circulars. The Commissioner's reliance on a supervisor's statement was deemed insufficient compared to the expert's opinion. Consequently, the Tribunal upheld the appellants' claim regarding the use of power in the manufacturing process.

Benefit of notifications:
The appellants claimed benefits of various notifications for ISI-Marked goods made without the use of power. For non-ISI marked products, a different notification was claimed. The issue of shifting goods inter unit for various operations and the subsequent delivery was also discussed. The Tribunal noted that since exemptions were available, no registrations were obtained. The Commissioner issued a show cause notice to deny benefits and recover duty for a specific period, leading to the present appeal. The Tribunal examined the issue in detail and found that the denial of the benefit of notification was not justified, thus rejecting the duty demands and penalties imposed.

Violation of principles of natural justice:
The Tribunal found that the appellants were not provided with necessary documents after the inquiry, causing prejudice to their defense. Moreover, the denial of cross-examination of witnesses was highlighted as a violation of the principles of natural justice. These factors, coupled with the lack of effective personal hearing, led the Tribunal to set aside the order on grounds of the violation of natural justice principles.

Barred by limitation:
The Commissioner issued a subsequent show cause notice invoking a proviso to recover duty for a previous period when facts were already known. The Tribunal held that this subsequent notice should be barred by limitation, as the evasion was already known, and the proceedings were initiated beyond the prescribed time limit. Citing relevant case law, the Tribunal found that the proceedings were indeed barred by limitation.

Conclusion:
The Tribunal allowed the appeal, setting aside the order due to violations of natural justice, being barred by limitation, and not being upheld on merits. No remand was deemed necessary, as the issuance of a second notice on the same material could not be rectified through remand proceedings. The order was pronounced in court on 15-7-2005.