1988 (2) TMI 329 - AT - Central Excise

Summary

Issues: Classification of ANFO, Central Excise Duty, Time Bar for Demand, Penalty Imposition

Classification of ANFO:
The appeal before the Appellate Tribunal CEGAT, New Delhi involved the classification of ANFO, a product made by mixing ammonium nitrate with fuel oil for blasting rocks. The Collector of Central Excise, Hyderabad issued a show cause notice alleging contravention of Central Excise Rules and demanded duty based on the value under the Central Excise Valuation Rules. The appellants argued that ANFO was a simple mixture, not an explosive, and that the Collector's description of the goods as compound or mixture lacked clarity. They also contended that the goods were not marketable and were prepared for immediate use. The Tribunal observed similarities with a previous case and upheld the Collector's classification of ANFO as chargeable to duty under Chapter 36 as prepared explosives.

Central Excise Duty:
The appellants claimed that the demand for duty was time-barred as it exceeded the 6-month period from the receipt of the show cause notice. They argued that the Department's doubt regarding the levy of duty on ANFO indicated a lack of clarity. The Tribunal, considering the facts and pleas made, agreed that the appellants acted in good faith believing no duty was leviable. Following the precedent set in a similar case, the Tribunal held that there was no justification for demanding duty beyond the 6-month period and set aside the extended demand.

Time Bar for Demand:
Regarding the time bar for demand, the Tribunal found that the circumstances of the case mirrored those of a previous case involving Singareni Collieries. The Tribunal, based on the absence of findings indicating non-compliance with Central Excise formalities to evade duty payment, concluded that the appellants were under a bona fide belief that no duty was chargeable. Consequently, the Tribunal ruled that there was no justification for extending the demand period beyond 6 months from the show cause notice receipt.

Penalty Imposition:
A penalty of Rs. 5,000 was imposed on the appellants by the Collector, which the Tribunal found unwarranted considering the facts and circumstances similar to the Singareni Collieries case where no penalty was levied. The Tribunal, in line with its findings, set aside the penalty, allowing the appeal partially with respect to the penalty imposition. The Tribunal concluded that the case did not merit a penalty and granted consequential relief by setting aside the penalty order.