1991 (9) TMI 180 - AT - Central Excise

Tribunal decision on natural justice, manufacturing process, Central Excise Tariff classification

ANUPAM RUBBER INDUSTRIES Versus COLLECTOR OF CENTRAL EXCISE

ANUPAM RUBBER INDUSTRIES Versus COLLECTOR OF CENTRAL EXCISE - 1992 (58) E.L.T. 153 (Tribunal) Issues Involved:1. Violation of principles of natural justice.2. Use of power in the manufacturing process.3. Classification of goods under the Central Excise Tariff.4. Limitation for demanding duty.Detailed Analysis:1. Violation of Principles of Natural Justice:The appellants contended that the Collector violated the principles of natural justice by adjudicating the case ex parte without granting a personal hearing despite a specific request. They relied on case law, including *Chandra Industries v. Collector of Central Excise* and *Sunrex Private Ltd v. Union of India*, to argue that the right to cross-examination and a hearing cannot be denied. However, the records showed that the Collector granted multiple extensions for the appellants to file a detailed reply, which they failed to do. The Tribunal concluded that the appellants had sufficient time to respond and that their request for cross-examination was vague. Therefore, the Tribunal found no arbitrary denial of the opportunity for a personal hearing and ruled that there was no violation of the principles of natural justice.2. Use of Power in the Manufacturing Process:The appellants argued that the electric motor was used only for stirring operations and the compressor for blowing operations, claiming no manufacturing process was carried out with the aid of power. The Tribunal noted the statements of the appellants' partner and other witnesses, which confirmed the use of an electric motor and compressor in the manufacturing process. The Tribunal held that the use of power in mixing/stirring rubber compound and other processes incidental to the completion of the finished product was established. However, the Tribunal directed the Collector to examine whether the compressor was used exclusively for non-agricultural hose pipes and to redetermine the duty demand if necessary.3. Classification of Goods under the Central Excise Tariff:The appellants contended that the goods should be classified under Item 16A(3) CET, which covers piping and tubing of unhardened vulcanised rubber, and claimed exemption under Notification 18/74. The Collector had classified the goods under Item 19-I(b) CET, which covers cotton fabrics subjected to the process of rubberising. The Tribunal observed that the Collector did not provide detailed reasoning for this classification. Given the appellants' contention and the lack of detailed reasoning, the Tribunal remanded the case to the Collector to reconsider the classification issue between Items 19-I(b) and 16A(3) CET and to provide findings on this matter.4. Limitation for Demanding Duty:The appellants argued that the demand was time-barred as the show cause notice was issued without any allegation of suppression of facts. The Tribunal noted that the duty was demanded under Rule 9(2) of the Central Excise Rules for unauthorized removal of excisable goods without payment of duty. The Tribunal found that the appellants had not declared the use of power to the Department and that the facts in the show cause notice supported the demand. Therefore, the Tribunal held that the appellants' arguments on limitation were unacceptable.Conclusion:The Tribunal remanded the case to the Collector for the limited purposes of:1. Determining whether the use of the compressor was confined to the manufacture of non-agricultural hose pipes for the period from April 1983.2. Reconsidering the correct classification of the goods under Item 19-I(b) or 16A(3) CET and the applicability of exemption under Notification 18/74.The appeal was disposed of by remand in these terms.