2000 (10) TMI 152 - AT - Central Excise

Tribunal confirms duty demand on Aluminium Wire Rods, reduces penalty

The Tribunal upheld the marketability and excisability of Aluminium Wire Rods, confirming duty demand and reducing the penalty on the appellant firm to ... Marketability as test of excisability - excisability of intermediate products - longer period of limitation (invocation where manufacture/clearance not disclosed) - onus on Revenue to prove marketability - personal penalty under Rule 209A of the Central Excise RulesMarketability as test of excisability - excisability of intermediate products - onus on Revenue to prove marketability - Aluminium Wire Rods manufactured/received by the appellants are marketable and hence excisable goods - HELD THAT: - The Tribunal accepted the settled principle that marketability, not actual sale, determines excisability and must be decided on the facts of each case. The appellants' contention that short-length wire rods are non-marketable was rejected: the appellants themselves produced and stored the wire rods, used them in further manufacture, and received similar rods from job-workers, demonstrating that the rods were capable of being marketed. Certificates asserting commercial inconvenience did not establish impossibility of drawing wire or non-marketability. Applying the Supreme Court's exposition that availability to purchasers, even if limited, suffices, the Tribunal held the wire rods fall within the tariff heading and are excisable. [Paras 7, 8]Wire Rods held marketable and therefore excisable.Longer period of limitation (invocation where manufacture/clearance not disclosed) - Invocation of the longer period of limitation in respect of the demand for duty was justified - HELD THAT: - The Tribunal found that the appellants did not maintain classification lists or records of manufacture of the wire rods and wilfully misrepresented in correspondence that the rods would be used in manufacture of dutiable goods. The permission under Rule 57F(2) did not amount to knowledge and consent by Revenue for usage ultimately involving duty-exempt final products. In these circumstances, and having regard to precedent holding non-filing of classification list or concealment justifies invoking the extended limitation, the longer period was rightly invoked and the demand for the period alleged (1990 to February, 1994) was confirmed. [Paras 9, 10]Longer period of limitation correctly invoked; demand within extended limitation is valid.Personal penalty under Rule 209A of the Central Excise Rules - Reduction of the personal penalty imposed on the appellant firm and setting aside of separate penalties on directors and manager - HELD THAT: - While the Tribunal confirmed the duty demand, it exercised discretion on penalties. Considering the overall facts and circumstances, the personal penalty on the firm was reduced from the amount imposed by the adjudicating authority to a lower sum. Separate penalties levied on the directors and the manager under Rule 209A were held unjustified on the record and were set aside. [Paras 11, 12]Demand confirmed; firm's personal penalty reduced; penalties on directors and manager set aside.Final Conclusion: The appeal results in confirmation of the excise duty demand for the period 1990 to February, 1994 on the ground that the Aluminium Wire Rods are marketable and excisable; the longer period of limitation was validly invoked. The personal penalty on the appellant firm is reduced, and penalties imposed on the directors and manager are set aside. Issues Involved:1. Marketability and excisability of Aluminium Wire Rods.2. Limitation for issuing demand notices.3. Justification for penalties imposed on the appellant firm and its directors/managers.Detailed Analysis:1. Marketability and Excisability of Aluminium Wire Rods:The appellants manufacture Aluminium Conductors (A.A.C.), Aluminium Conductor Steel Reinforced (A.C.S.R.), and single wires. They convert Aluminium Ingots into Wire Rods, which are then drawn into wires. The appellants argued that these Wire Rods, which are 15' to 25' long, are not marketable due to their short length, making them non-excisable despite being listed in the Central Excise Tariff. They supported this claim with certificates from M/s. BALCO and M/s. NALCO stating that such short Wire Rods are not commercially viable for wire drawing.The Revenue contended that marketability is determined by the capability of the product to be marketed, not by actual marketing. The fact that the appellants used these Wire Rods and had them manufactured by job workers indicates their marketability. The Tribunal agreed with the Revenue, citing the Supreme Court's ruling that marketability is a question of fact and goods are excisable if they are capable of being marketed. The Tribunal found that the Wire Rods, despite their short length, are marketable and thus excisable, as evidenced by their use and the job workers' involvement.2. Limitation for Issuing Demand Notices:The appellants contested the demand on the grounds of limitation, arguing that all show cause notices were issued beyond the normal six-month period. They highlighted a letter dated 28-10-1989 to the Assistant Commissioner of Central Excise, Dhanbad, informing about the conversion of imported Aluminium Ingots into Wire Rods for manufacturing AAC/ACSR Conductors. They claimed this should have alerted the Revenue about their activities.The Revenue countered that the appellants did not file any classification lists or maintain records for the Wire Rods, and their bona fide belief was unsupported. The Tribunal found that the appellants' letter did not disclose that the Wire Rods would be used to manufacture duty-exempt Aluminium Wires. The Tribunal upheld the longer limitation period, agreeing with the adjudicating authority that the appellants suppressed material facts.3. Justification for Penalties Imposed on the Appellant Firm and its Directors/Managers:The adjudicating authority imposed a personal penalty of Rs. 9.25 lakh on the appellant firm and additional penalties on the directors and manager under Rule 209A of the Central Excise Rules, 1944.The Tribunal confirmed the demand of Rs. 9,24,818.54 but reduced the penalty on the appellant firm to Rs. 5 lakh, considering the overall circumstances. The Tribunal found no justification for separate penalties on the directors and manager, setting aside the penalties imposed on them.Conclusion:The Tribunal confirmed the duty demand and reduced the penalty on the appellant firm to Rs. 5 lakh. It set aside the penalties on the directors and manager, allowing their appeals. The key findings were that the Aluminium Wire Rods were marketable and excisable, the longer limitation period was applicable due to suppression of facts, and separate penalties on the directors and manager were unwarranted.