2004 (9) TMI 488 - AT - Central Excise

Summary

Issues:
1. Whether the benefit of Notification No. 16/2000-Cus. (Serial No. 169) is available to the goods imported by M/s. Arihant Steels?
2. Whether the extended period of limitation is invokable for demanding the Customs duty?

Analysis:

Issue 1:
The appeal filed by M/s. Arihant Steels raised the issue of whether they were entitled to the benefit of Notification No. 16/2000-Cus. (Serial No. 169) for the goods they imported. The appellant argued that they followed the prescribed procedures under the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996, by obtaining registration, executing a bond, and utilizing the imported unwrought nickel in the manufacture of ferro nickel. They contended that the end-use certificate confirmed the utilization of the imported material in the manufacture of steel indirectly through ferro nickel. However, the Department argued that the appellants did not use the imported unwrought nickel in the manufacture of steel as required by the Notification. The Tribunal found that the appellants did not satisfy the conditions of the Notification as they sold ferro nickel to steel manufacturers instead of using it themselves in the manufacture of steel. The Tribunal held that the benefit of the Notification was not available to the appellants as they did not use the imported material as specified, and the extended period of limitation was not applicable as there was no intent to evade payment of duty.

Issue 2:
Regarding the extended period of limitation for demanding Customs duty, the Tribunal considered the argument put forth by the appellant that the show cause notice issued beyond the six-month time limit specified in Section 28(1) of the Customs Act was time-barred. The appellant contended that they had not suppressed any material fact and had complied with all requirements under the Customs Rules, 1996. The Tribunal agreed that the extended period of limitation was not applicable as the appellants had not concealed any facts, and the Department had issued them the necessary certificates indicating proper utilization of the imported material. The Tribunal also noted that the demand for Customs duty and penalty was set aside due to the time limit specified in Section 28 of the Customs Act.

Additional Issue:
The Tribunal also addressed the confirmation of Central Excise duty against the appellants due to a shortage of raw material found during a visit to their factory premises. The appellant disputed the shortage based on the method of estimation used by Central Excise officers. However, the Tribunal upheld the demand for Central Excise duty and penalty as the lower authorities had found evidence of shortage, including admissions made by the appellants themselves. The Tribunal found no reason to disagree with the findings of the lower authorities regarding the shortage of raw material and upheld the demand for Central Excise duty and penalty.

In conclusion, the Tribunal set aside the demand for Customs duty and penalty but upheld the demand for Central Excise duty and penalty against the appellants.