1990 (6) TMI 150 - AT - Central Excise

Issues Involved:

1. Applicability of exemption under Notification 176/77 dated 18-6-1977.
2. Alleged manipulation of capital investment figures.
3. Determination of the value of capital investment.
4. Alleged suppression of facts and evasion of duty.
5. Time-barred demand of duty.
6. Interpretation and application of Notification 105/80 dated 19-6-1980.

Issue-wise Detailed Analysis:

1. Applicability of Exemption under Notification 176/77:

The appellant company was initially exempted from duty due to having less than 50 workers. Post 18-6-1977, Notification 176/77 changed the basis of exemption to depend on the value of clearances and capital investment in plant and machinery. The company claimed that their capital investment was below Rs. 10 lakhs, thus qualifying for exemption.

2. Alleged Manipulation of Capital Investment Figures:

The department alleged that the appellant manipulated the capital investment figures. The appellant reported an investment of Rs. 6,83,130/- based on a Chartered Accountant's certificate and a valuer's report. However, the department's investigation revealed the actual investment was over Rs. 16,03,146/- based on the company's balance-sheet.

3. Determination of the Value of Capital Investment:

The show cause notice alleged that the values declared by the appellant were depreciated values rather than the face value at the time of installation, as required by the notification. The appellant argued that the plant and machinery for Bisphenol production were in disuse, thus justifying the lower valuation.

4. Alleged Suppression of Facts and Evasion of Duty:

The show cause notice accused the appellant of willful suppression of facts with the intent to evade duty, demanding Rs. 2,57,813.96p for the period 18-6-1977 to 31-12-1980. The appellant contended that the department was fully informed and had approved their classification list, negating any suppression of facts.

5. Time-barred Demand of Duty:

The appellant argued that the demand was time-barred as the show cause notice was issued on 18-11-1981 for the period 18-6-1977 to 31-12-1980. They claimed that the department's approval of their classification list indicated no suppression of facts. The department countered that the appellant's misleading certificates justified the extended time limit for duty recovery.

6. Interpretation and Application of Notification 105/80:

The appellant cited Tribunal judgments to argue that the explanation added in Notification 105/80 should be read into earlier notifications, allowing exclusion of machinery rendered unfit for use. The department maintained that the machinery for Bisphenol production was still installed and not unfit for use, thus its value should be included in the capital investment.

Judgment Analysis:

The Tribunal found that the appellant's claim of machinery being in disuse was not credible, as Bisphenol was declared in their classification list. The machinery was not permanently removed or rendered unfit for use, thus its value should be included in the capital investment.

The Tribunal rejected the appellant's reliance on previous judgments, as the machinery was not unfit for use. The certificates provided by the appellant were deemed a deliberate concoction, indicating depreciation rather than face value at installation. This led to the conclusion of willful suppression of facts, justifying the extended time limit for duty recovery.

The Tribunal dismissed the appeal, upholding the demand for duty and the imposed penalty. The President concurred, noting that the valuation certificates indicated current market value, not installation value, confirming the appellant's deliberate suppression of facts.

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