2008 (7) TMI 170 - AT - Central Excise

Appellants are engaged in the manufacture of rubberized textile fabrics which were being cleared by them without payment of duty by availing exemption u/not. 4/97-C.E. - In terms of the said Notifications fabrics are allowed to be cleared without payment of duty if no credit u/r 57A has been availed since assessee availed credit on inputs (furnace oil) exemption ibid cannot be allowed since misdeclaration is proved hence invocaton of longer period is justified

Summary

Issues:
Manufacture of rubberized textile fabrics without duty payment under specific notifications.
Availment of credit on furnace oil leading to duty demand.
Time-barred demand and misdeclaration regarding credit availed.

Analysis:
The case involves the appellants engaged in manufacturing rubberized textile fabrics under specific exemptions. The Revenue discovered that the appellants had availed credit on duty paid for furnace oil used in steam generation, contrary to the conditions of the exemptions. A show cause notice was issued for duty demand, penalty, and interest for alleged suppression of facts. The Commissioner confirmed the duty demand and penalty.

The advocate for the appellants argued that the furnace oil was used as an intermediate product for both dutiable and exempted products. They maintained separate inventory for raw materials but had availed credit on fuel, considering it a minuscule input. Referring to Rule 57CC, the advocate contended that credit on fuel should not deny exemption under the notifications. The limitation defense was based on prior declarations and visits by authorities, claiming no misdeclaration and a genuine belief in credit availing not affecting exemptions.

The Tribunal considered the provisions of the notifications and rules governing credit availment. Notification No. 4/97 exempted products if no credit under Rule 57A was taken. The Tribunal noted that credit on fuel used for steam generation was indeed availed, making the appellants ineligible for the exemption. Despite the argument of the credit being minimal, the condition of no credit availed on inputs for exemptions was not met, leading to a dismissal of the appeal on merits.

Regarding the time-bar issue, the Tribunal found the appellants' filing history contradictory. While declarations indicated no credit on inputs for exempted products, the actual availing of credit on fuel for both dutiable and exempted items constituted a misdeclaration. Thus, the extended period for demand was justified, and the demand was not time-barred. Consequently, the appeal was rejected based on these findings.

In conclusion, the Tribunal upheld the duty demand and penalty, ruling against the appellants on both merit and time-bar grounds. The judgment highlights the importance of strict compliance with exemption conditions and accurate declarations to avoid adverse consequences in excise duty matters.