2002 (10) TMI 549 - AT - Central Excise

Excise Duty Ruling: Manufacturing Process Disclosure Impacts Liability

The Tribunal upheld the Adjudicating Authority's findings that a distinct excisable item had emerged after the manufacturing process, classifying the ... Manufacture - Die press forging of cut-out pieces of brass rods - Demand - Limitation - Suppression of fact Issues:1. Classification of goods as excisable items.2. Time-barred demand for excise duty.3. Application of extended period of limitation.Classification of goods as excisable items:The appeal involved a dispute regarding the classification of goods manufactured by M/s. Techno Stampings. The Collector, Central Excise had confirmed the demand of Central Excise duty, penalty, and confiscation of goods, considering the activity as amounting to manufacture, leading to the emergence of a distinct commodity known as 'rough shape and section.' The appellant argued that the rough forged brass lumps were not excisable goods and cited precedents to support their claim. However, the Tribunal found that the processes undertaken by the appellants transformed the raw materials into identifiable forged products, satisfying the test for manufacture. The Tribunal upheld the Adjudicating Authority's findings that a distinct excisable item had emerged after the manufacturing process.Time-barred demand for excise duty:The appellant contended that the demand for excise duty for the period from April 1983 to 16-10-1985 was time-barred as there was no misrepresentation or suppression of facts. They argued that the Department was aware of their operations from the beginning and cited correspondence to support their claim. However, the Tribunal invoked the extended period of limitation as the fact of manufacture was not disclosed to the Department, leading to the demand being confirmed for the specified period. The Tribunal held that the suppression ended with a letter sent by the appellants in February 1985, disclosing the manufacturing processes. Therefore, the demand of duty beyond that date was deemed time-barred, and the appellants were directed to pay the duty only up to 13-2-1985 by invoking the proviso to Section 11A(1) of the Act.Application of extended period of limitation:The Tribunal considered the applicability of the extended period of limitation for demanding excise duty. Citing a Supreme Court decision, it held that the extended period was invocable as the manufacture and clearance of excisable goods were not disclosed by the appellants. The Tribunal noted that the suppression of facts ended with the letter sent in February 1985, and hence, the demand of duty beyond that date was time-barred. The redemption fine was confirmed, but the penalty amount was reduced. The Tribunal disposed of the appeal based on these findings, directing the re-computation of the duty amount payable by the appellants.This detailed analysis of the judgment addresses the issues of classification of goods as excisable items, the time-barred demand for excise duty, and the application of the extended period of limitation, providing a comprehensive overview of the legal arguments and the Tribunal's decision in each aspect.