1990 (10) TMI 181 - AT - Central Excise

Excise Duty Appeal Decision: Duty liability, classification, penalty, and confiscation considered.

PLASTICRAFT INDUSTRIES Versus COLLECTOR OF CENTRAL EXCISE

PLASTICRAFT INDUSTRIES Versus COLLECTOR OF CENTRAL EXCISE - 1991 (52) E.L.T. 84 (Tribunal) Issues Involved:1. Chargeability of duty of excise on plastic articles2. Marketability of the plastic articles3. Correct classification under the Excise Tariff4. Applicability of Section Notes and Chapter Notes5. Limitation period for demand of duty6. Imposition of penalty and confiscation of plant and machineryDetailed Analysis:1. Chargeability of Duty of Excise on Plastic Articles:The appellants contested the chargeability of duty on plastic articles they manufactured, arguing these were unfinished parts used in various appliances and industries. They claimed that the raw materials used were already duty-paid and that their products were generally excisable under the Central Excise and Salt Act. Initially, they were required to take out a Central Excises license and paid duty under protest, but later received a refund when it was decided they were not liable to pay duty.2. Marketability of the Plastic Articles:The appellants argued that their products were not marketable as they were supplied in an unfinished state requiring further processes. They cited various Supreme Court decisions to support their claim that the goods were not marketable. The Collector, however, concluded that the articles were marketable, citing a market worth Rs. 1 crore. The Tribunal found that the products, although unfinished, were identifiable parts and had a market as they were purchased by manufacturers for further processing.3. Correct Classification under the Excise Tariff:The appellants were advised that their products fell under Chapter 39, sub-heading 3922, and would be exempt under Notification No. 132/86. However, the department issued a Show-Cause-Notice classifying the products under Chapters 84 to 92, 95, and 96. Specifically, parts for Mixies and Grinders were classified under Heading 8509.00. The appellants contended that this classification was incorrect as their products did not fit the description of Electro-Mechanical Domestic Appliances with Self-Contained Electric Motors.4. Applicability of Section Notes and Chapter Notes:The appellants argued that Chapter 39 Note 2(n) and Section XVI Note 2(g) excluded parts of general use made of plastic from the scope of Chapter 85.09. The Tribunal found that the products could not be considered parts of general use as they were specifically designed for fitment to appliances. Thus, the classification under Heading 85.09 was deemed correct.5. Limitation Period for Demand of Duty:The appellants contended that the department was aware of their manufacturing activities and had previously granted a refund, arguing that the extended period under Section 11-A should not apply. The Tribunal referred to the Supreme Court's decision in C.C.E. v. Chemphar Drugs & Liniments, which stated that the extended period applies only when there is conscious or deliberate withholding of information. Since no such withholding was proven, the demand was restricted to a period of six months.6. Imposition of Penalty and Confiscation of Plant and Machinery:The Tribunal upheld the penalty under Rule 173-Q for removal of goods without payment of duty but reduced it to Rs. 2,50,000/-. The confiscation of plant and machinery was set aside, providing consequential relief in redemption fine. The order of the Collector was maintained in all other respects.Conclusion:The appeal was modified to the extent of reducing the penalty and setting aside the confiscation of plant and machinery, but was otherwise rejected. The duty demand was restricted to a six-month period, and the classification under Heading 85.09 was upheld.