TMI Blog1998 (5) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... moulding powder obtained by pulverizing LDPE granules and imposing a penalty of Rs. 8 Lakhs. 2. Shri Kamal Trivedi, learned Counsel for the appellants submits that the following three main issues arise for consideraion : (I) Whether the activity of pulverizing LDPE/HDPE granules to obtain smaller size particles/fine moulding powder amounts to manufacture in terms of Note 6 to Chapter 39 of the Central Excise Tariff Act, 1985 read with Section 2 (f)(ii) of the Act? (II) Whether the extended period of limitation is available to the department? (III) In the event of Issue No. I being decided against the appellants, whether they are entitled to Modvat credit against the payment of duty effected on the appellants final products viz. pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed for the purpose of manufacture of plastic water tanks falling under T.I. 68. On 24-2-1986, the Range Superintendent directed the appellants to follow the licence procedure with effect from 2-4-1986, on the ground that process of conversion of granules into small size particles is nothing but change of product from one primary form to another, amounting to manufacture. On 5-3-1986, the appellants replied explaining as to how the process of pulverizing is not a process of chemical synthesis and since it is only change in primary form as a result of chemical synthesis which is considered as manufacture in terms of Chapter Note 6 to Chapter 39, the appellants were not obliged to take out a Central Excise licence. The Range Superintendent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter dated 29-5-1986, the Divisional AC informed the Collector of Central Excise, Baroda that the unit of the appelllant company was engaged in the activity of pulverizing LDPE granules into moulding powder and that a case had been booked against the appellants by the Preventive staff which resulted in the issue of a show cause notice dated 22-7-1985 which was ultimately dropped by the Collector vide order dated 1-4-1986. From the above exchange of correspondence, it is clear that the department was all along aware of the activity of pulverization undertaken by the department and there is no question of any fraud or wilful suppression of facts or wilful mis-statement with intent to evade payment of duty. The learned DR s contention that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the period from 8-12-1987 to 2-2-1988 being the period within the normal period of limitation. III. As regards the plea of grant of Modvat credit, the matter is remitted to the Commissioner of Central Excise, Baroda for determining this issue in the light of the legal position as reflected in the orders of the Tribunal including the Larger Bench decision in the case of Dai-Ichi Karkaria reported in 1996 (81) E.L.T. 676. The Commissioner of Central Excise shall hear the appellants and pass appropriate orders in accordance with law. The appeal is disposed of in the above terms. 4. [Order per : S.K. Bhatnagar, Vice President]. - I observe that one of the main issues involved in this case is whether the activity of pulverizing LDPE/HDPE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er to treat the product as an excisable item. This aspect, however, does not seem to have attracted the attention in the aforesaid cases and has not been urged in the present case as well. On the contrary, The appellants have not pressed this point relating to excisability. Therefore, I do not propose to go further on this point but, I am still recording the above position as we are bound by Hon ble Supreme Court s judgments and there are already a catena of orders on this aspect that emergence of a new marketable commodity was essential to hold a product excisable. 6. Insofar as the question of time bar is concerned, since the appellants had taken up the stand as early as March, 1986 and communicated their views to the department that in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufactured out of such raw material, then the appellants were obviously entitled to Modvat with reference to the duty, if any, paid on such granules or powder and therefore, in case they were in a position to show substantive compliance with the Modvat procedure, the benefit was required to be extended to them. The Departmental Officers were, however, entitled to verify the facts and satisfy themselves on this score. 9. I, therefore, agree that the matter was required to be remanded and the Commissioner was required to grant them a hearing and to allow them to produce such material as may be required for purposes of re-determining the duty, if any due, and the Modvat benefit to which they may be found eligible. 10. It is ordered accor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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