Appellate Judge Upholds Duty Liability with Reduced Penalties; Appeals Disposed

The appellate judge upheld the duty liability on Appellant No. I, as the activities amounted to manufacture. Penalties were imposed but reduced due to the genuine dispute on the manufacturing activities, with no finding of wilful evasion. The penalties were set at Rs. 10,000/- for Appellant No. I and Rs. 5,000/- for Appellant No. 2. Interest on the duty amount was to be paid as per Section 11AB provisions. The impugned order was modified, and the appeals were disposed of with consequential relief.

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Issues: Duty liability of appellant No. I and imposition of penalties on both appellants

Duty Liability of Appellant No. I:
The issue in these appeals pertains to the duty liability of appellant No. I for the goods manufactured by them. Appellant No. 2 received an order for supply of carline and Body Side Pillar from Rail Coach Factory and got them manufactured from raw material supplied by the factory through job work basis from appellant No. I. Appellant No. I contested the duty liability, arguing that their activities did not amount to manufacture. Both authorities below concluded that the activities did amount to manufacture as new products emerged. The appellate judge upheld these findings, confirming the duty liability on appellant No. I.

Penalties Imposition:
Regarding the imposition of penalties equal to the duty amount on appellant No. I, the Counsel argued that there was no wilful evasion of duty as there was a genuine dispute on whether the activities amounted to manufacture. The judge accepted this argument, noting that it was not a case of wilful evasion. The penalties on both appellants were reduced to Rs. 10,000/- for appellant No. I and Rs. 5,000/- for appellant No. 2. However, the interest on the duty amount was to be paid as per Section 11AB provisions. The impugned order was modified accordingly, and the appeals were disposed of with consequential relief as per law.

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