1991 (5) TMI 130 - AT - Central Excise

Issues Involved:
1. Classification of the appellants' product.
2. Invocation of the extended period under Section 11A(1) proviso.
3. Removal of 40 coils of copper wire in contravention of Central Excise Rules.
4. Duty recoverable on 70.1029 M.T. of copper wire cleared between 11-4-1988 to 25-6-1988.
5. Duty recoverable on 1947.100 kgs. of copper wire found short with reference to RG 1 balance.

Detailed Analysis:

1. Classification of the Appellants' Product:
The appellants had filed two classification lists: No. 71/88 dated 10-3-1988 and No. 33/88 dated 5-7-1988. Initially, they declared their product as "copper wire of refined copper of cross-sectional dimension exceeding 6 mm" under Heading 7408.11. Later, they reclassified the product as "refined copper and copper alloys, unwrought refined copper (copper wire rods in coil form)" under Heading 7403.19. The Tribunal found that the product, being mechanically worked (rolled), should be categorized as 'wrought' and not 'unwrought'. The appellants' claim that the product did not have a uniform cross-section was rejected based on their own declarations in the classification lists. Therefore, the product was correctly classifiable under Heading 7408.11.

2. Invocation of the Extended Period under Section 11A(1) Proviso:
The Tribunal held that the classification list No. 71/88 dated 10-3-1988 had been approved, and the appellants were maintaining statutory records and filing prescribed returns. Citing relevant case law, the Tribunal concluded that it was not permissible for the Department to invoke the extended period of five years under the proviso to Section 11A(1).

3. Removal of 40 Coils of Copper Wire in Contravention of Central Excise Rules:
The appellants claimed that the seized goods were consigned to M/s Johnson Electricals, Baroda, but the Tribunal found ample evidence suggesting that the goods were removed from the factory against false documents for delivery to parties in Surat. Statements from various witnesses, including the driver, conductor, and an employee of the appellants, supported the Department's case. The Tribunal upheld the Additional Collector's order holding the seized 40 coils of copper wire as liable to confiscation and the appellants liable to penal action under Rule 173Q(1).

4. Duty Recoverable on 70.1029 M.T. of Copper Wire Cleared Between 11-4-1988 to 25-6-1988:
Given the Tribunal's finding that the Department could not invoke the extended period under Section 11A(1) proviso, the Additional Collector's order confirming the demand of duty on 70.1029 M.T. of copper wire coils was not sustainable and was set aside.

5. Duty Recoverable on 1947.100 kgs. of Copper Wire Found Short with Reference to RG 1 Balance:
The appellants attributed the shortage to burning losses, but the Tribunal found no evidence to support this claim. The daily stock account should reflect the actual weight of the goods produced and cleared, and any discrepancy indicated surreptitious removal. Therefore, duty was recoverable on the shortfall of 1947.100 kgs under Rule 9(2) read with proviso to Section 11A(1).

Conclusion:
The appeal was disposed of with the following decisions:
- The classification of the appellants' product under Heading 7408.11 was upheld.
- The invocation of the extended period under Section 11A(1) proviso was not permissible.
- The confiscation of the seized 40 coils of copper wire and the penalty under Rule 173Q(1) were upheld, but the redemption fine was reduced to the appropriation of the cash security of Rs. 25,000/-.
- The demand for duty on 70.1029 M.T. of copper wire coils was set aside.
- The duty on 1947.100 kgs of copper wire found short was confirmed.
- The penalty was reduced from Rs. 1 lakh to Rs. 50,000/-.

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