1999 (9) TMI 779 - AT - Central Excise

Summary

Issues Involved:
1. Eligibility for exemption under Notification No. 202/88-C.E.
2. Classification of inputs as bars or flats.
3. Invocation of the extended period of limitation for demand of duty and imposition of penalties.
4. Mis-declaration and suppression of facts.
5. Entitlement to Modvat credit.

Detailed Analysis:

1. Eligibility for Exemption under Notification No. 202/88-C.E.
The appellants, manufacturing tubes and pipes from bars, contested their eligibility for exemption under Notification No. 202/88-C.E., dated 20-5-1988. The Tribunal, following the decision in Calcutta Steel Indus. v. CCE, observed that exemption was not admissible as the products were manufactured from bars, not flats. The appellants accepted this classification and agreed that their products were not eligible for exemption under the said notification.

2. Classification of Inputs as Bars or Flats
The appellants did not challenge the classification of their inputs as bars. It was settled by the Tribunal in the case of Calcutta Steel Indus. v. CCE that the inputs were bars, not flats. The appellants admitted to this classification, thus agreeing that their products were not eligible for the exemption under Notification No. 202/88-C.E.

3. Invocation of the Extended Period of Limitation for Demand of Duty and Imposition of Penalties
The appellants argued against the invocation of the extended period of limitation, citing no intention to evade duty and availability of Modvat credit. The adjudicating authority, however, found that the appellants had mis-declared their inputs and suppressed vital information with intent to evade duty. The extended period of five years was invoked under Section 11A of the Central Excise Act, 1944, as the appellants' actions were deemed willful mis-statements and suppression of facts.

4. Mis-declaration and Suppression of Facts
The appellants mis-declared their inputs as flats instead of bars to avail of the exemption. They did not maintain proper excise records or issue gate passes. The adjudicating authority concluded that the appellants had willfully suppressed facts and made mis-statements to evade duty. This was supported by incomplete and incorrect declarations, and the appellants' failure to provide necessary documents.

5. Entitlement to Modvat Credit
Despite the procedural lapses, the adjudicating authority allowed the appellants to take Modvat credit for the duty paid on the inputs. The credit was restricted to the duty payable on bars, and the Asstt. Collector was directed to verify the duty-paying documents. The appellants' plea for credit under Rule 57(A) of the Central Excise Rules, 1944, was accepted, even though they had not followed the prescribed procedure.

Conclusion:
The Tribunal confirmed the orders passed by the CCE (Appeals), Ghaziabad, and CCE, Meerut, rejecting all eight appeals. The appellants were found ineligible for exemption under Notification No. 202/88-C.E., and the extended period of limitation for duty demand and penalties was rightly invoked due to mis-declaration and suppression of facts. The appellants were, however, allowed to take Modvat credit for the duty paid on bars.