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2005 (7) TMI 234 - AT - Central ExciseDemand - Limitation - Suppression of facts - EOU - Whether the Wax used for grazing the yarn is to be considered as a 'Raw material' or as 'Consumable? - HELD THAT - In view of the enormous evidence on record, the appellants contention that wax is Consumable is required to be accepted. In terms of the Board's Circular No. 389/22/98-CX and Circular No. 631/22/02-CX clarifying that Consumables are not raw materials and its use will not disentitle the benefit of the Notification in question, the appellants prayer for setting aside the impugned order is required to be upheld. Even on time-bar, the appellants have made out a strong case in their favour. The appellants were using imported wax and its use was within the knowledge of the department as is clearly borne out from the records. The Superintendent, by his letter dated 16-2-1999 had asked the appellants as to whether they were using any imported material. The appellants had clarified about the use and the department was aware of the use of this Wax in terms of the declarations and various correspondences they had with the department. The appellants' industry was also under control of the department. In the circumstance, it cannot be said that there are suppressions in the matter and the department was unaware of the use of Wax. Therefore, the demands are required to be held as time- barred. The appellants succeed both on merits as well as on time-bar. The appeal is allowed with consequential relief if any.
Issues:
1. Classification of Wax as raw material or consumable for manufacturing Cotton Yarn. 2. Whether the appellant wrongly availed Notification No. 8/97-CX. 3. Time-barred demands by the department. Issue 1: Classification of Wax The appeal involved the classification of Wax used in manufacturing Cotton Yarn as either a raw material or a consumable. The appellant argued that Wax was a consumable based on expert evidence from SITRA and Bombay Textile Research Association. The experts clarified that Wax was not essential for the end-product and was removed before dyeing. The Tribunal referenced the Nahar Spinning Mills case, where Wax was considered a consumable. The Board's Circulars also supported that consumables do not disentitle benefits under the Notification. Ultimately, the Tribunal accepted the appellant's contention that Wax was a consumable, not a raw material. Issue 2: Wrong Availment of Notification The Department alleged that the appellant wrongly availed Notification No. 8/97-CX by not disclosing the use of imported Wax as a raw material. The Department cited cases where certain items were considered raw materials. However, the appellant argued that the entire activity was known to the Department, as evidenced by correspondences and declarations. The appellant relied on the Ballarpur Industries case and Apex Court judgments to support their claim that Wax was not essential for manufacturing the end-product. The Tribunal found in favor of the appellant, stating that the demands were time-barred and the appeal was allowed on merits. Issue 3: Time-barred Demands The Department contended that the demands were not time-barred due to misdeclaration and lack of filing details. They referenced various judgments to support their argument. However, the appellant demonstrated that the Department was aware of the use of imported Wax, as evidenced by correspondences and control over the industry. The Tribunal held that there were no suppressions as the Department was informed about the Wax usage. Citing relevant judgments, the Tribunal ruled in favor of the appellant, stating the demands were time-barred and allowed the appeal with consequential relief. This detailed analysis of the judgment highlights the key issues of classification, wrong availment of benefits, and time-barred demands, providing a comprehensive understanding of the legal reasoning and expert opinions considered in reaching the final decision.
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