2001 (10) TMI 425 - AT - Central Excise

Tribunal upholds excise duty demand on fabricated pipes, emphasizes commercial identifiability & adherence to regulations

The Tribunal upheld the demand for excise duty on the fabricated pipes, rejected the time-barred defense, applied the extended period of limitation, and ... Manufacture - Demand - Limitation - Extended period Issues Involved:1. Whether pipes of MS sheets fabricated at the site are assessable to excise duty.2. Whether the demand for duty is time-barred.3. Whether the extended period of limitation is applicable.4. Assessment of penalty imposed on the Appellants.Analysis:Issue 1:The appeal questioned the assessability of excise duty on pipes of MS sheets fabricated on-site. The Appellant argued that what they manufactured were cylindrical hollow fabricated items, not pipes. They contended that the huge size of the items made them non-marketable goods. However, the Department asserted that the fabrication of MS pipes was evident from the Work Order and the processes involved in manufacturing. The Tribunal concluded that the Appellants did fabricate pipes, which were commercially identifiable products, despite being called cylindrical hollow fabricated items. The Tribunal held that if an excisable product emerges during contract execution, excise duty is leviable. The size of the pipes did not negate their marketability, citing precedents where similar products were deemed excisable goods.Issue 2:Regarding the time-barred demand for duty, the Appellants argued that the demand was invalid due to the Department's awareness of their activities and the delayed issuance of the show cause notice. The Tribunal disagreed, stating that the Appellants suppressed the fact of pipe fabrication, leading to duty evasion. The correspondence exchanged post-period of demand did not absolve them of liability. Following legal precedents, the Tribunal upheld the demand for the extended period.Issue 3:The question of the extended period of limitation's applicability was raised. The Tribunal found that due to the suppression of fabrication facts and non-compliance with excise formalities, the extended period was justified. Relying on relevant case law, the Tribunal upheld the demand for duty for the extended period.Issue 4:Regarding the penalty imposed on the Appellants, the Tribunal reduced it to Rupees Twenty-five thousand, considering the circumstances of the case. Despite upholding the duty demand, the penalty was mitigated due to the specific facts and context of the situation.In conclusion, the Tribunal upheld the demand for excise duty on the fabricated pipes, rejected the time-barred defense, applied the extended period of limitation, and reduced the penalty imposed on the Appellants. The judgment emphasized the commercial identifiability of the fabricated pipes and the obligation to adhere to excise regulations, even in cases of delayed discovery by the authorities.