1998 (5) TMI 87 - AT - Central Excise

Tribunal overturns duty demand, penalty, and fine, directs reevaluation

The Tribunal set aside the Collector of Central Excise's decision imposing duty demand, penalty, and redemption fine on the appellant. The Tribunal ... Furniture - SSI Exemption - Value of clearances - Appeal Issues:1. Duty demand and penalty imposed by the Collector of Central Excise.2. Allegations of failure to obtain a license, contravention of various rules, suppression of information, and exemption availability.3. Classification of goods under Central Excise Tariff headings T.I. 40 and T.I. 68.4. Exclusion of bought-out items in clearances for duty calculation.5. Reconsideration of trading activity for duty exemption calculation.Analysis:Issue 1: Duty demand and penalty imposed by the Collector of Central ExciseThe appeal was filed against an Order-in-Original confirming a duty demand of Rs. 5,78,299/-, penalty of Rs. 50,000/-, and Redemption Fine of Rs. 2,500/- by the Collector of Central Excise. The Collector found the appellant to have failed to comply with licensing requirements, contravened various rules, willfully suppressed information, and denied exemption under Notification 85/85.Issue 2: Allegations of non-compliance and exemption availabilityThe appellants, claiming to be an SSI unit, argued that they regularly filed notifications for exemption under specific notifications. They contested the charges of suppression of sales and argued that the extended period for demand could not be invoked. The appellant also disputed the classification of articles purely made of cast iron as steel furniture and highlighted their acquittal in a criminal prosecution by the department.Issue 3: Classification under Central Excise Tariff headings T.I. 40 and T.I. 68The appellants contended that their products should be classified under T.I. 68 instead of T.I. 40 as no steel was used in certain items. The Tribunal acknowledged the appellants' argument, stating that items made of cast iron without steel would fall under T.I. 68, provided no other classification applies.Issue 4: Exclusion of bought-out items in clearances for duty calculationThe appellant emphasized the exclusion of the value of bought-out items in clearances for trading. They argued that duty exemption for SSI units should be separately calculated for steel furniture (T.I. 40) and cast iron frames/furniture (T.I. 68), citing relevant case laws and circulars.Issue 5: Reconsideration of trading activity for duty exemption calculationThe Tribunal noted that the trading activity of the appellants, where goods were directly supplied to buyers, needed reassessment. The value of bought-out items not essential to goods manufactured by the appellants should be excluded from clearance value for duty exemption calculation, a consideration overlooked in the impugned order.In conclusion, the Tribunal set aside the impugned order and remanded the matter to the original authority for reevaluation, emphasizing the correct classification under the Central Excise Tariff, segregation of clearances for duty calculation, and exclusion of non-essential bought-out items. The appellants were granted the opportunity to present evidence and arguments, with a successful appeal by way of remand.