1999 (6) TMI 92 - AT - Central Excise

Tribunal upholds duty demands and penalties, denies benefits, rejects revenue-neutrality plea

AMCO BATTERIES LTD. Versus COMMISSIONER OF C. EX., BANGALORE

The tribunal dismissed the appeals, upholding duty demands and penalties imposed on the appellants. The appellants were denied benefits under ... Lead - exemption under Notification No. 217/86-C.E. not available Issues Involved:1. Applicability of Notification No. 186/84-C.E. to waste and scrap (W & S) generated during the manufacture of lead acid electric storage batteries.2. Eligibility for exemption under Notification No. 37/81-C.E. for lead ingots obtained from refiners and job-workers.3. Justifiability of duty demand for the period 2-11-1987 to 13-8-1989.4. Validity of procedural deviations and their impact on duty demands.5. Consideration of revenue neutrality in duty demands.6. Duplication of duty demands between Hebbal Plant and Mysore Road Unit.7. Applicability of limitation period for issuing show cause notices.8. Imposition of penalties on the appellants.Detailed Analysis:1. Applicability of Notification No. 186/84-C.E. to Waste and Scrap (W & S):The appellants claimed exemption under Notification No. 186/84-C.E. for W & S generated during the manufacture of lead acid electric storage batteries. The contention was that lead ingots obtained from refiners and job-workers were exempted under Notification No. 37/81-C.E. and thus should be treated as duty-paid. However, the tribunal noted the absence of evidence to support this claim. The tribunal concluded that the benefit of Notification No. 186/84-C.E. was rightly denied as the lead ingots from refiners and job-workers were not proven to be duty-paid.2. Eligibility for Exemption under Notification No. 37/81-C.E.:The appellants argued that lead ingots from refiners and job-workers were exempted under Notification No. 37/81-C.E. and thus should be considered duty-paid. The tribunal rejected this argument due to the lack of evidence showing that the refiners and job-workers had cleared the lead ingots under the said notification. The tribunal emphasized that the exemption under Notification No. 37/81-C.E. could not be presumed without concrete evidence.3. Justifiability of Duty Demand for the Period 2-11-1987 to 13-8-1989:For the period 2-11-1987 to 13-8-1989, the appellants admitted to taking Modvat credit on duty-paid lead ingots obtained from MMTC and imports. The tribunal noted that there was no provision for allowing pro-rata benefit of the notification when credit of duty paid on any of the inputs had been taken. The tribunal upheld the duty demand for this period, rejecting the appellants' plea for pro-rata benefit.4. Validity of Procedural Deviations and Their Impact on Duty Demands:The appellants argued that procedural deviations, such as not obtaining permission under Rule 57F(2) and not issuing delivery challans in the prescribed proforma, should not result in duty demands. The tribunal found that these were only procedural deviations and did not justify the non-payment of duty on W & S. The tribunal held that the duty demand was valid despite the procedural deviations.5. Consideration of Revenue Neutrality in Duty Demands:The appellants contended that the entire exercise was revenue-neutral since duty paid on scrap could be taken as Modvat credit by job-workers. The tribunal rejected this argument, noting that the job-workers were not paying duty and thus would not have taken Modvat credit. The tribunal concluded that the plea of revenue-neutrality was hypothetical and unsupported by the facts of the case.6. Duplication of Duty Demands Between Hebbal Plant and Mysore Road Unit:The appellants argued that there was duplication of duty demands as certain quantities of scrap were removed from Hebbal Plant to Mysore Road Unit and then sent to refiners. The tribunal did not find sufficient evidence to support the claim of duplication and upheld the duty demands for both units.7. Applicability of Limitation Period for Issuing Show Cause Notices:The appellants argued that the show cause notices were barred by time as they were issued beyond the normal limitation period of six months. The tribunal found that the appellants failed to provide evidence that the department was aware of the clearance of W & S without payment of duty. The tribunal held that the larger limitation period of five years was rightly invoked due to the suppression of facts.8. Imposition of Penalties on the Appellants:The appellants contended that penalties should not be imposed as there was no intention to evade payment of duty. The tribunal rejected this argument, noting that the appellants had not followed the prescribed procedures and had suppressed facts. The tribunal upheld the imposition of penalties.Conclusion:The tribunal dismissed the appeals, upholding the duty demands and penalties imposed on the appellants. The tribunal found that the appellants were not entitled to the benefits of Notifications No. 186/84-C.E. and 37/81-C.E. due to lack of evidence and procedural deviations. The tribunal also rejected the pleas of revenue-neutrality and limitation, affirming the validity of the duty demands and penalties.