2000 (12) TMI 135 - AT - Central Excise

Tribunal Upholds Central Excise Duty on OHE Fittings & Metal Parts, Penalty Reduced

The Tribunal upheld the demand for central excise duty on Overhead Electrification (OHE) fittings and metal parts for electrical insulators, denying them ... Castings - Demand, confiscation and penalty - Limitation Issues Involved:1. Duty liability on Railway Inserts.2. Duty liability on Overhead Electrification (OHE) fittings.3. Duty liability on Metal parts for electrical insulators.4. Eligibility for exemption under Notification No. 275/88-C.E.5. Allegation of suppression of facts and invocation of the extended period of limitation.6. Imposition of penalty and fine.Detailed Analysis:1. Duty Liability on Railway Inserts:The primary issue was whether Railway Inserts were classifiable under Heading No. 73.02 or 73.25 of the Central Excise Tariff. The appellants argued that the Railway Inserts were unmachined cast articles of iron, thus eligible for exemption under Notification No. 275/88-C.E. However, it was determined that the Railway Inserts underwent processes such as annealing, fettling, and grinding, which took them out of the purview of the exemption. The Tribunal referred to the decision in Hindustan Gas and Indus. Ltd. v. Commissioner of Central Excise, Vadodara, concluding that the appropriate classification was under Heading No. 73.25 as cast articles of iron or steel, but they were not eligible for the exemption. Duty was to be re-worked accordingly.2. Duty Liability on Overhead Electrification (OHE) Fittings:The OHE fittings were subjected to galvanisation, which was considered a machining process. The Tribunal agreed with the adjudicating authority that the benefit of Notification No. 275/88-C.E. was not available to these products. The galvanisation process meant the fittings could not be considered unmachined castings, thus attracting central excise duty.3. Duty Liability on Metal Parts for Electrical Insulators:Similar to the OHE fittings, the metal parts for electrical insulators were subjected to processes that disqualified them from being considered unmachined castings. The Tribunal upheld the adjudicating authority's decision that these parts were not eligible for the exemption under Notification No. 275/88-C.E., and central excise duty was applicable.4. Eligibility for Exemption under Notification No. 275/88-C.E.:The exemption under Notification No. 275/88-C.E. was applicable to unmachined iron castings and unmachined cast articles of iron. The Tribunal found that the processes undertaken by the appellants, such as annealing, fettling, grinding, and galvanisation, meant that the products could not be considered unmachined. Therefore, the exemption was not applicable.5. Allegation of Suppression of Facts and Invocation of the Extended Period of Limitation:The adjudicating authority concluded that there was suppression and wilful mis-statement by the appellants. The Tribunal agreed with this conclusion, noting that the appellants did not declare OHE fittings and electrical transmission caps in the classification lists, justifying the invocation of the extended period of limitation.6. Imposition of Penalty and Fine:The adjudicating authority had imposed a penalty of Rs. 20 lakhs and a fine of Rs. 10 lakhs in lieu of confiscation of plant, land, building, etc. The Tribunal reduced the penalty to Rs. 10 lakhs and set aside the fine imposed in lieu of confiscation, considering the facts and circumstances of the case.Conclusion:The Tribunal upheld the demand for central excise duty on OHE fittings and electrical transmission caps, and ordered the duty on Railway Inserts to be recalculated under Heading No. 73.25 without the benefit of the exemption. The penalty was reduced, and the fine in lieu of confiscation was set aside. The appeal was otherwise rejected.