1999 (1) TMI 181 - AT - Central Excise

Manufacturer's Duty Demand Appeal: Notification 118/88 Zinc Use Ruled Permissible

METAL PRESS INDIA Versus COMMISSIONER OF CENTRAL EXCISE, MUMBAI-V

METAL PRESS INDIA Versus COMMISSIONER OF CENTRAL EXCISE, MUMBAI-V - 1999 (112) E.L.T. 79 (Tribunal) Issues:1. Benefit of Notification 118/88 for the manufacture of copper and copper articles including alloys.2. Denial of benefit of notification due to the use of zinc ranging from 20 to 40%.3. Applicability of the extended period for duty demand.4. Interpretation of the Board's Circular No. 138/8/81-C.Ex-IV regarding the notification.5. Use of metals not falling under Chapter 74 in the manufacture of copper and copper alloys.6. Effectiveness of the Board's circular issued in 1982 on subsequent clearance of goods in 1992-93 and 1993-94.7. Intention to evade duty and the bar of limitation for demand.Analysis:The appellant, engaged in manufacturing copper and copper articles, was granted the benefit of Notification 118/88 for copper and brass. However, a notice was issued proposing to deny this benefit due to the use of zinc ranging from 20 to 40%. The Commissioner confirmed the proposal, leading to a duty demand. The appellant argued citing a Tribunal decision and a Board's Circular that the notification applied despite the use of zinc and that the extended period for duty demand should not apply due to a bona fide belief in the notification's availability.The Tribunal considered the Tribunal's decision in a similar case and the Board's Circular, emphasizing that small quantities of metals like zinc were permissible as a technological necessity for copper manufacturing under the notification. However, the Tribunal noted that significant quantities of non-Chapter 74 metals, like zinc for copper alloys, were not covered by the notification's intention. The Board's Circular took a different stance, stating that the notification's benefit could not be denied even with added metals if copper content was predominant, without providing reasoning.The Tribunal found it unnecessary to verify the correctness of the Board's Circular, issued ten years before the goods' clearance in question. It concluded that manufacturers would have relied on the Circular's interpretation, leading to a belief in the notification's availability and no intent to evade duty. Consequently, the extended period for duty demand was inapplicable, and the demand was barred by limitation. The appeal was allowed, and the impugned order was set aside, granting consequential relief.