V. Padmanabhan ORDER
V. Padmanabhan, Member (T)
1. This appeal is against the order in original dated 09.03.2007. The appellant is engaged in the manufacture of brass, zinc, nickel, tin and lead alloys falling under Tariff Subheading 74.03 of the 1st schedule to the Central Excise Tariff Act, 1985.
2. The dispute pertains to the period 01.04.1987 to 31.3.1990. Show cause notice dated 07.07.1992 was issued for demand of Central Excise Duty amounting to Rs. 49,83,736/- along with a proposal for imposition of penalties under various rules as well as a proposal for confiscation of land, building, plant and machinery used in the manufacture of excisable goods. The appellant was not discharging the Central excise duty payable on the goods viz. alloys of various nonferrous metals, by taking the view that these metals as well as metal alloys remained classified in the same tariff heading up to 13.5.1988 and hence there can be no manufacture in the conversion of metal into metal alloys. Revenue was of the view that conversion of nonferrous metals into metal alloys would amount to manufacture in terms of the section 2(f) of the Central Excise Act 1944 both prior to 13/05/1988 as well as for the period subsequent thereto. The case was initially adjudicated by the Commissioner wide his order dated 16.7.1998 in which the Central excise duty demands stand confirmed. When this order of the Commissioner was challenged before the Tribunal, the order was set aside since it was passed ex parte without considering the submissions of the appellant, and vide the Tribunal's order dated 04.05.2001, the case was remanded back to the adjudicating authority for passing de novo orders after extending an opportunity to the appellant. The impugned order dated 09.03.2007 stands passed by the Commissioner in the de novo proceedings in which the duty demand as proposed in the show cause notice stands confirmed along with penalty of Rs. 50 lakh under rule 173Q. Aggrieved by this order the present appeal has been filed mainly agitating the following grounds:
i) The process undertaken by the appellant by including other materials to the material purchased by them, does not amount to manufacture and hence there can be no demand for Central excise duty.
ii) None of the other units engaged in the manufacture of similar goods were paying Central excise duty on their product. Hence there is a general trade practice for non-payment of duty.
iii) In spite of repeated attempts made by the appellant, all the documents based on which the show cause notice has been issued, has not been supplied to them. Consequently the demand raised, on the basis of such documents, cannot be sustained.
iv) The appellant had sought cross-examination of the investigating officers which has not been permitted by the adjudicating authority.
v) If the process undertaken by the appellant amounts to manufacture, they will be entitled to the benefit of small-scale industry exemption notification number 175/86 dated 01.03.1986 since they were registered with the Director of Industries.
vi) They will also be entitled to the benefit of Modvat credit on inputs and capital goods used in the manufacture of final products, if they are liable to pay Central excise duty on their final products.
3. With the above background heard Shri. Bipin Garg, the Ld. Counsel for the appellants and Sh. M.R. Sharma, DR appearing for the revenue.
4. The 1st issue is whether the goods viz. Nickel, lead and tin alloys made by the appellant were liable to Central excise duty during the disputed period. The defense raised by the appellant is that till 12.5.1998, both metals and its alloys were classifiable under the same subheading and after 13.5.1998, the Central Excise Tariff stands fully aligned with HSN. Consequently, metal alloys cannot be considered as a manufactured product since they remain classified in the same heading as t........