2002 (5) TMI 549 - AT - Central Excise

Tribunal Upholds Duty Demand on Tube Manufacturer, Reduces Penalty

The Tribunal confirmed the demand of duty on M/s. Atma Tube Products Limited for manufacturing tubes from cold-rolled coils, dismissing their appeal and ... Demand and Penalty Issues:1. Admissibility of extended period for demand of Central Excise duty.2. Allegations of clandestine removal of tubes without payment of duty.3. Application of limitation period under Section 11A(1) of the Central Excise Act, 1944.Analysis:Issue 1: Admissibility of extended period for demand of Central Excise dutyThe case involved M/s. Atma Tube Products Limited appealing against the order of the Commissioner (Appeals) regarding the demand of Central Excise duty. The appellants argued that the extended period for demand was not applicable as the department was aware of their lack of hot-rolling facility. Citing a precedent, the Commissioner (Appeals) upheld the order-in-appeal, stating that the limitation of five years was available even when the department had knowledge of the facts. The Tribunal confirmed the demand of duty, emphasizing that since the appellant did not have a hot-rolling facility and cold-rolling was being done by others, the tubes manufactured from cold-rolled coils were liable for duty.Issue 2: Allegations of clandestine removal of tubes without payment of dutyThe appellants were engaged in manufacturing Cold-Rolled Strips and Tubes from imported H.R. Coils. It was alleged that they had cleared tubes of varying thicknesses without paying Central Excise duty by misrepresenting them as hot-rolled tubes. The Department contended that the imported coils were re-rolled to reduce thickness, indicating clandestine removal of duty-liable tubes. The Tribunal agreed with the Department's assessment, noting that the size and thickness of the tubes indicated re-rolling of imported coils and subsequent clearance of duty-liable tubes.Issue 3: Application of limitation period under Section 11A(1) of the Central Excise Act, 1944The appellants argued that the demand was time-barred as the show-cause notice was issued beyond six months. They claimed no suppression or misstatement that warranted invoking the longer period under Section 11A(1). However, the Department contended that there was clear suppression and misstatement regarding the conversion of hot-rolled coils into cold-rolled strips. The Tribunal held that since cold-rolling was established and thickness reduction required rolling, the longer period was correctly invoked. The penalty imposed was reduced due to the circumstances of the case.In conclusion, the Tribunal confirmed the demand of duty on the appellants for manufacturing tubes from cold-rolled coils, dismissed the appeal, and reduced the penalty imposed.