Tribunal Ruling: Duty Recovery Upheld, Time-Barred Claim Dismissed, Modvat Credit Allowed, Valuation Guidance Provided

INDIAN OXYGEN LTD. Versus COLLECTOR OF CENTRAL EXCISE, BHUBANESWAR

INDIAN OXYGEN LTD. Versus COLLECTOR OF CENTRAL EXCISE, BHUBANESWAR - 1997 (89) E.L.T. 557 (Tribunal) Issues involved:
The issues involved in this case are:
1. Alleged manufacture and removal of Liquid Oxygen Explosives (LOX) without Central Excise license.
2. Evasion of Central Excise duty and contravention of Central Excise Rules.
3. Imposition of duty recovery and penalty by the adjudicating authority.
4. Appeal against the adjudicating authority's decision.

Manufacture and Removal of LOX without License:
The appellants were alleged to have manufactured LOX without a Central Excise license, removed it without paying duty, and contravened various Central Excise Rules. The duty evasion was claimed to be Rs. 52,469.81 on 2407 cartridges of LOX valued at Rs. 3,49,798.75. The adjudicating authority confirmed the duty and imposed a penalty of Rs. 10,000 on the appellants.

Excisability of LOX and Marketability:
The appellants argued that LOX cannot be considered goods due to its lack of shelf-life and specific premises for manufacture. However, the tribunal found that LOX is a marketable product based on invoices and marketing as explosives. The goods were deemed excisable under Tariff Sub-heading 36.02 despite the appellants' contentions.

Time Barred Show-Cause Notice:
The appellants claimed that the show-cause notice for duty demand was time-barred, citing their communication with the department and subsequent licensing. The tribunal disagreed, stating that the limitation of 5 years from the date of removal applied, and the notice was validly issued within this period.

Modvat Credit and Valuation of Goods:
The appellants sought Modvat credit for duty paid on inputs used in LOX manufacture. The tribunal directed the benefit be extended if admissible. Regarding valuation, the tribunal instructed that if invoices did not separately show duty charges, the price should be considered inclusive of duty, with deductions allowed as per Section 4 of the Act.

Decision and Disposition:
The matter was remanded to the adjudicating authority to determine the net duty liability, considering Modvat credit and valuation adjustments. No penalty was imposed on the appellants based on the circumstances of the case.

Conclusion:
The tribunal upheld the duty recovery and dismissed the time-barred notice claim, while allowing Modvat credit and providing guidance on valuation for the appellants. No penalty was imposed, and the appeal was disposed of accordingly.