CESTAT Bangalore tribunal directs recomputation of duty liability for small-scale industry appeal

The CESTAT Bangalore tribunal allowed the appeal by the small-scale industry, directing a recomputation of duty liability only on items fabricated by the appellants in Hyderabad, excluding those purchased from the open market or original equipment manufacturers. The original duty liability of Rs. 29,66,803/- and penalty under Section 11AC were set aside, with the matter remanded to the lower authority for the revised calculation. The tribunal's decision was pronounced in open court, with the adjudication order to be issued within four months from the tribunal's ruling.

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The appellate tribunal CESTAT, Bangalore, consisting of S/Shri T.K. Jayaraman and M.V. Ravindran, JJ., heard the representation of the appellant, Shri B.V. Kumar, Advocate, and the respondent, Ms. Joy Kumari Chandar, JCDR. The appellants, registered as a small-scale industry, were found to have a duty liability for the year 2003-2004 due to a contract with M/s. Sandur Power Company Ltd. for the supply of items for hydroelectric projects. The supplies to the Sandur Power Company Ltd. were initially supposed to be funded by the World Bank, making them exempt from Central Excise Duty. However, due to changes in circumstances, the exemption was lost, resulting in a duty liability of Rs. 29,66,803/- and a penalty under Section 11AC. The Commissioner (Appeals) upheld the lower authority's order, leading the appellants to challenge the decision. The appellants argued that the duty liability should only apply to items fabricated by them in their unit at Hyderabad, excluding items purchased from the open market or original equipment manufacturers. The tribunal agreed with the appellants, remanding the matter to the original authority for a recomputation of the duty liability based on items fabricated by the appellants in Hyderabad. The adjudication order is to be issued within four months from the date of the tribunal's order. The tribunal's decision was pronounced and dictated in open court. This summary covers all relevant issues comprehensively.

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