TALASH PLASTOPACKS Vs. COMMISSIONER OF CENTRAL EXCISE, CALICUT

JUDGEMENT

(1.) THESE appeals arise from Order -in -Original No. 5/2003, dated 21 -8 -2003 by which the Commissioner has confirmed demands for larger period by invoking proviso to Sec. 11A of the Act and has also imposed like sum of penalty besides imposing penalty of Rs. 10,000/ - on the Managing Partners of the appellant -factory under Rule 173Q of Central Excise Rules. The appellants are manufacturers of Thermoformed Disposable Plastic Containers falling under Sub -heading No. 3923.90. The raw material is Polystyrene granules falling under Chapter 3903.10 purchased by the assessee. While manufacturing the final product Thermoformed Disposable Plastic Containers, an intermediate product Polystyrene sheets arises which the Department says is classifiable under CSH 3920.31 of the Tariff. The appellants have not disputed the correctness of the classification of the product. The Department has initiated proceedings for the larger period by issue of show cause notice dated 27 -8 -2001 for the periods from 2 -6 -1998 to 13 -10 -1998 and 1 -4 -1999 to 5 -8 -1999 to recover duty of the Polystyrene sheets captively consumed for the manufacture of Thermoformed Disposable Plastic Containers.

(2.) THE appellants contention before the authorities was that they were availing the benefit of Notification. No. 5/98, dated 2 -6 -1998 as amended and Notification. No. 67/95, dated 16 -3 -1995. They had paid duty up to the exempted limits and it was contended that all clearances at nil rate of duty based on value paid clearances should be considered as clearances after payment of appropriate duty. Their second contention was that all the details of the manufacture of the goods including the intermediate product Polystyrene sheets had been declared to the Department time and again and the declarations had been signed by the officers of the Department and therefore there was no intention to evade duty and that the demands were barred by time. They also submitted that the duty had been paid on the granules and they had not taken Modvat credit on the final product and therefore they were eligible for the benefit of Modvat credit on the duty paid on the initial input. The Commissioner has rejected all their pleas and has held that according to proviso to Notification. No. 67/95 the exemption to captively consumed inputs i.e., Polystyrene sheets is not available to the assessee. He has held that although the appellants had extended and filed the declarations dated 25 -12 -1995 disclosing the details of manufacturing process including the occurrence of sheets, yet he found fault with the appellants in not paying duty on the Polystyrene sheets. Hence, he proceeded to hold that the demands were maintainable for larger period and confirmed the same and has imposed penalty. He has not considered the Apex Court judgment and the Tribunal judgments on time -bar relied by the assessee.

(3.) WE have heard Shri Sreedharan, Advocate for the appellants and Shri P.M. Saleem, SDR for the Revenue.