Per V.K. Agrawal :

In this appeal, filed by M/s. S.S. Bedi Sons, the issue involved is whether Central Excise duty is payable on Lay Flat Tubing.

2. Shri S.C. Kamra, learned Advocate, submitted that the Appellants manufacture poly-bags which are exempted from payment of duty under Notification No. 4/97-CE dated 1.3.97; that they obtained Lay Flat Tubing as an intermediate product in the manufacture of poly-bags from plastic granules; that the impugned goods were exempted from payment of excise duty right from 1994-95 till today except for the financial year 1997-98; that the Additional Commissioner under the Adjudication Order No. 170/99 dated 7.10.99 has demanded the duty in respect of Lay Flat Tubing cleared during the period from 1.4.97 to 31.12.97 and imposed penalty of Rs. 50,966/- equivalent to the amount of duty under Rule 173Q of the Central Excise Rules, read with Section 11AC of the Central Excise Act; that the Commissioner (Appeals) under the impugned Order has confirmed the demand and the penalty. He, further, submitted that the entire demand is time barred as the show cause notice was issued on 7.4.99 i.e. beyond the normal time limit of 6 months; that there was no allegation of fraud, collusion, willful mis-statement, or suppression of facts in the show cause notice; that in absence of specific allegation of suppression of fact etc. the extended period of time limit cannot be invoked as held by the Supreme Court in the case of CCE Vs. H.M.M. Ltd., 1995 (76) ELT 497 (SC). He also mentioned that it is settled law that the plea of limitation, being a legal plea, can be raised before the Appellate Tribunal. Reliance has been placed on the decision in the case of CCE Vs. Hiper, 1989 (41) ELT 322 (Tribunal) and CCE Vs. Pioma Industries Imperial Soda Factory, 1997 (20) RLT 122 (SC)=1997 (91) ELT 527 (SC). He also referred to the following decisions:-

(i) CCE Vs. Texmaco Ltd. - 1992 (61) ELT 477 (T),

(ii) Bombay Tubes Containers Vs. CCE, Bombay - 1996 (88) ELT 491 (T),

(iii) Kanoria Chemicals Vs. CCE - 1999 (112) ELT 294 (T)

3. The learned Advocate, further, contended that the impugned goods are not excisable goods since intermediate products are used captively in the factory of manufacture; that in the absence of marketability of the product it cannot be subjected to excise duty; that it is well settled that the goods must be known in the market and unless the test of marketability is satisfied duty cannot be levied as held in the case of U.O.I. Vs. Delhi Cloth General Mills Co. Ltd., 1977 (1) ELT J 177. He also mentioned that the Adjudicating Authority has not established that the impugned goods are marketable product as known in the market and as such duty cannot be levied. He also contended that the value of the product has been wrongly worked out in the Adjudication Order; that as per the show cause notice the total clearance value of the finished goods (poly-bags) exceeded the admitted value of clearance of Rs. 40 lakhs by Rs. 6,98,853.50 which worked out to be 14.87% of the value of the clearances; that the show cause notice allows abatement of 14.87% from the aggregate value of clearances towards cutting, printing, and packing charges incurred in the manufacture of poly-bags; that after allowing such abatement the aggregate value of clearance of the impugned goods should have been Rs. 40 lakhs; that the excise duty would be leviable on Rs. 10 lakhs (Rs. 40 lakhs minus Rs. 30 lakhs initial exemption limit); that thus the duty has been calculated and demanded wrongly. He also mentioned in this regard that the percentage of the impugned goods was only 30 to 40 per cent of the total cost of poly bags and as such the total value of Lay Flat Tubing would be between Rs. 12 to 16 lakhs much below the exemption limit and as such no duty is payable by them. Finally he submitted that a penalty equivalent to the amount of duty cannot be imposed as the entire demand is time barred; that in any case there was no mens