Full Judgment
2. The Collector did not accept the contentions of the assessees with regard to limitation or the contention that no new goods were manufactured. He confirmed the demand holding that there was misdeclaration of facts and imposed a penalty of Rs. 50,000/-. Hence this appeal.
3. The representative of the appellant says that the copper rods which were rejected as being defective or otherwise unsuitable by the customer were melted down and again rolled into bars. The representative of the appellant says that they were sent back after subjecting the goods to various processes. It received 8 mm rods and sent them back and therefore there has been no manufacture. He relies for this purpose upon the decision of the Tribunal in CC v. J.G. Glass Ltd. -1988 (37) E.L.T. 248 and Triveni Sheet Glass Works Ltd. v. CCE -1992 (62) E.L.T. 329.
4. He says that the notice has been issued in May, 1992 for clearance which took place between July and October 1991 by invoking the extended period contained in proviso to Section 11 A. He contends that in view of the decision of the Tribunal in CCE v. J.G. Glass -1988 (37) E.L.T.248 the appellant was under the bona fide belief that when goods were remade out of goods originally cleared from the factory and returned, duty would not be payable.
5. The departmental representative says that the decision in J.G. Glass is founded upon a view that there is an ambiguity in Rule 173H in what is permitted in Sub-rule (1) has been disallowed in Sub-rule (2). She says that there is no ambiguity at all. Sub-rule (1) permitted to bring in his factory excisable goods which inter alia, need to be remade, refined etc. Sub-rule (2) permitted these goods to be removed without payment of duty if not subjected to any process amounting to manufacture. Therefore she says the two provisions doubted in each other. Sub-rule (1) provides permission to bringing excisable goods in the factory and Sub-rule (2) provides that goods after being brought in are subjected to a process, amounting to manufacture which would have to be cleared on payment of duty. She therefore prays that this point has apparently not been urged and the decision should not be considered. Alternatively if this plea is not accepted she requests a reference to the larger Bench for reconsideration of that decision. She contends that the larger period of limitation has been rightly invoked since, on a reading of the D 3 declaration the department would not know that goods were being subjected to such processes as would result in complete destruction of their original identity. She contends that the question of refund of duty under Rule 173L was available on the ground that this is a hypothetical issue and it is not possible now at this stage that such refund would have been availed of. She further contends that Modvat credit will not be available because the goods were not cleared as inputs under Rule 157G.6. We do not think it necessary to consider the question of whether the decision of the Tribunal in CC v. JG Glass requires reconsideration or not. It was held in that decision that remaking of returned excisable goods resulting in emergence once again of the identical kind of goods would not be manufacture within the meaning of Rule 173H. This decision held the field at the relevant time and the assessees who referred to the decision legitimately would have come to the conclusion that processes such as those considered in that decision would not amount to manufacture. The appellant could hence legitimately have come to the same conclusion. In that situation, it cannot be said that they suppressed the facts or made any misdeclaration with a view to intentionally evading duty. Hence the extended period of limitation could not be applicable and the demand is barred by time.