1997 (1) TMI 193 - AT - Central Excise

Granite stone cutting not manufacturing; Appeal allowed based on genuine belief; No wilful suppression; Penalty overturned

The Tribunal allowed the appeal, finding that cutting and polishing granite stone did not amount to manufacture. The appellant's genuine belief, supported ... Demand - Limitation - Manufacture Issues: Appeal against order of Collector of Central Excise; Determination of whether cutting and polishing granite stone amounts to manufacture; Entitlement to Notification No. 77/83 benefit; Invocation of extended period of limitation under Section 11A; Imposition of penalty.Analysis:1. The appellant challenged the Collector's order, arguing that the demand should not have exceeded six months due to a bona fide belief that the process did not constitute manufacture. The appellant cited a certification from the District Industrial Officer and filed declarations, asserting no wilful suppression of facts to evade duty. The appellant agreed to pay duty within six months from the notice.2. The appellant highlighted conflicting views on whether cutting and polishing granite stone constituted manufacture. The appellant referenced a decision by the Collector (Appeals) and a Tribunal order, emphasizing a genuine belief in non-manufacture due to differing opinions in the industry and legal precedents, including a Karnataka High Court ruling.3. The appellant contested the valuation exceeding Rs. 20 lakhs, arguing that certain imported items were surplus or spares, thus falling below the threshold. The appellant maintained that no wilful suppression occurred, supported by a certificate from the District Industrial Officer and compliance with record-keeping requirements.4. The Judicial Member analyzed the evidence, noting the divergence in opinions and legal precedents regarding the manufacturing status of the granite process. The Member referenced a Supreme Court judgment and the Karnataka High Court decision to support the appellant's bona fide belief in non-excisability. Consequently, the Member held that there was no wilful suppression by the appellant.5. Considering the submissions, the Tribunal found no intentional withholding of information by the appellant. The Tribunal confirmed duty payment within six months but set aside the demand beyond that period, citing the absence of mala fide intent. The imposed penalty was overturned, and the appeal was partially allowed based on the above findings.