1995 (8) TMI 113 - AT - Central Excise

Tribunal Upholds Duty Demand on Liquid Oxygen Explosives; Exemption Claim Rejected

The Tribunal upheld the Collector's decision confirming duty demand and penalties on Liquid Oxygen Explosives, ruling that they were chargeable to duty ... Modvat Credit Issues:1. Duty demand and penalty imposed by the Collector of Central Excise & Customs Bhubaneswar on Liquid Oxygen Explosives.2. Classification of Liquid Oxygen Explosives under Central Excise Tariff Act.3. Exemption claim under Notification No. 179/77.4. Allegations of suppression of facts by the appellants.5. Claim of Modvat credit by the appellants.Analysis:1. The Collector confirmed a duty demand on Liquid Oxygen Explosives and imposed a penalty under Rule 173Q of the Central Excise Rules, 1944. The appellants were aggrieved by the order-in-original dated 29-12-1987. The Collector held that the liquid oxygen explosive attracted Central Excise Duty and imposed penalties for contraventions of the Central Excise Rules. The appellants contended that they had been clearing the product without duty payment, claiming it was not an exigible good. They argued that the product did not undergo a manufacturing process and was used solely for blasting purposes.2. The Department argued that the liquid oxygen explosives were classifiable under Chapter 36 of the Central Excise Tariff Act and were not exempted under Notification No. 179/77. The Department relied on precedents where similar products were classified as prepared explosives under Chapter 36. The Tribunal agreed with the Department's classification, emphasizing that the product had a specific name, use, and character, making it chargeable to duty under Chapter Heading 36.01.3. The appellants claimed exemption under Notification No. 179/77, dated 18-6-1977, stating that the product was manufactured without the aid of power. However, the Collector held that the appellants were aware of the duty liability from 1-3-1986 and failed to comply with statutory requirements such as obtaining a license, maintaining records, and paying duty. The Tribunal upheld the Collector's decision, ruling that the liquid oxygen explosives were chargeable to duty and not exempt under the said notification.4. The Collector accused the appellants of suppressing facts by not obtaining a license, not maintaining records, and not paying duty on the clearances made. The appellants argued that they had no intention to misrepresent facts and had paid duty for clearances made from their unit at Daitari. The Tribunal found no suppression for invoking a larger period but remanded the case for further consideration on the claim of Modvat credit.5. The appellants also claimed Modvat credit, which was not addressed in the original order. The Tribunal remanded the case to the lower authorities for de novo consideration on the question of limitation and the claim of Modvat credit. The Tribunal held that the impugned goods were chargeable to duty under Chapter Heading 36.01 and directed a reevaluation of the Modvat claim by the lower authorities.