Extended limitation and captive-consumption exemption: non-disclosed marketable parts were treated as excisable and denied Notification No. 67/95-C.E. relief.

Non-disclosure of captively consumed parts in the classification declaration can justify invocation of the extended limitation period where the department learns of their manufacture only through recorded statements. The parts of light recovery vehicles were also treated as identifiable and marketable goods, so they were held excisable. Because those excisable intermediate goods were used in the manufacture of exempt special purpose motor vehicles, exemption under Notification No. 67/95-C.E. was denied. The duty demand was sustained, while the penalty was reduced, and the appeal was only partly allowed.

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Issues: (i) whether the demand was barred by limitation and the extended period could be invoked; (ii) whether the parts manufactured for captive consumption were excisable and, if so, whether exemption under Notification No. 67/95-C.E. was available.

Issue (i): whether the demand was barred by limitation and the extended period could be invoked.

Analysis: The parts of Light Recovery Vehicles were not disclosed in the classification declaration, and the department came to know of their manufacture and captive clearance only from recorded statements of company officials. On that basis, the non-disclosure was treated as sufficient to justify invocation of the extended period.

Conclusion: The demand was held not to be barred by limitation, and the extended period was upheld against the assessee.

Issue (ii): whether the parts manufactured for captive consumption were excisable and, if so, whether exemption under Notification No. 67/95-C.E. was available.

Analysis: The parts were found to be identifiable goods capable of being brought to the market and sold, and the finding of marketability was not successfully displaced. Since those excisable parts were used in the manufacture of special purpose motor vehicles exempt from duty, the exemption meant for captively used intermediate goods was denied.

Conclusion: The parts were held to be excisable, and exemption under Notification No. 67/95-C.E. was rightly disallowed.

Final Conclusion: The duty demand was sustained, but the penalty was reduced, resulting in a partial allowance of the appeal.

Ratio Decidendi: Non-disclosure of captively consumed goods in the classification declaration can justify the extended limitation period, and marketable excisable inputs used in the manufacture of exempt final products do not qualify for captive-consumption exemption.

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