2000 (7) TMI 143 - AT - Central Excise

Tribunal upholds Central Excise Duty demand, reduces penalties for non-compliance with duty liability rules

The Tribunal upheld the demand for Central Excise Duty as confirmed by the Commissioner (Appeals) in the impugned orders, while reducing the penalties ... Notification No. 214/86-C.E. - job work exemption conditioned on supplier's undertaking and proof of use in manufacture of final product - Notification No. 1/93-C.E. - exemption subject to turnover/clearance limits - Rule 57F(2) challan for movement of excisable goods - liability of supplier for duty on finished products vis-a-vis job-worker's liability - marketability test for intermediate goodsNotification No. 1/93-C.E. - exemption subject to turnover/clearance limits - Availability of exemption under Notification No. 1/93 to the appellants' clearances - HELD THAT: - The adjudicating authorities found, and the Tribunal accepted, that the appellants had crossed the prescribed value thresholds so as to disentitle them from the benefit of Notification No. 1/93. It was specifically held that the appellants' clearances had exceeded the Rs. 75 lakh limit by 28-2-1994, excluding entitlement for March 1994, and that in the relevant preceding financial year their aggregate clearances exceeded the Rs. 200 lakh limit specified in the Notification for 1994-95. Those factual findings were not controverted before the Tribunal. Consequently the adjudicators correctly held that the exemption under Notification No. 1/93 was not available to the appellants for the periods in question.Exemption under Notification No. 1/93 not available to the appellants for the periods found by the adjudicating authorities.Notification No. 214/86-C.E. - job work exemption conditioned on supplier's undertaking and proof of use in manufacture of final product - Rule 57F(2) challan for movement of excisable goods - liability of supplier for duty on finished products vis-a-vis job-worker's liability - Whether the appellants were entitled to exemption under Notification No. 214/86 for goods manufactured on job work basis - HELD THAT: - Notification No. 214/86 grants exemption for goods manufactured as job work provided the supplier of the raw material gives an undertaking to the Assistant Collector that the goods will be used in or in relation to manufacture of the final product, produces evidence of such use and undertakes responsibility for duty on the finished products. The Tribunal found no evidence that the suppliers had supplied materials under the provisions of Notification No. 214/86 or had given the requisite undertaking; the challans produced referred only to movement under Rule 57F(2). In the absence of material showing compliance with the specific conditions of Notification No. 214/86, the appellants could not claim its benefit. The Tribunal further observed that para 2 of Notification No. 214/86 contemplates liability of the supplier for duty on the finished products and does not convert the job-worker into the person liable for duty on goods manufactured as job work. The adjudicating authorities' reliance on earlier authority following that principle was upheld.Claims under Notification No. 214/86 were rejected for lack of supplier's undertaking and proof of use; demand of duty confirmed.Marketability test for intermediate goods - Whether the appellants could contend before the Tribunal that untrimmed sheets/circles were not marketable and hence not excisable - HELD THAT: - The Tribunal in an earlier decision had held that untrimmed sheets and circles of copper/copper alloys are excisable products falling under the relevant tariff heading. Consequently, the appellants were precluded from re-invoking a marketability contention before this Bench. The Tribunal therefore accepted the prior conclusion of excisability and proceeded to decide entitlement to notifications on that basis.Argument that the products were not marketable was not open to the appellants before the Tribunal; excisability as previously held stands.Penalty reduction in exercise of appellate discretion - Validity and extent of penalties imposed on the appellants - HELD THAT: - While upholding the demand of duty, the Tribunal exercised discretion in respect of penalties imposed by the lower authorities. Having considered the facts and circumstances of each case, the Tribunal reduced the penalties imposed on the appellants and recorded the modified amounts in its order.Penalties reduced by the Tribunal and appeals disposed of subject to the reduced penalties.Final Conclusion: The Tribunal upheld the confirmed demands of Central Excise duty against the four appellants, rejecting their claims under Notification No. 1/93 (on turnover grounds) and Notification No. 214/86 (for absence of supplier's undertaking and proof of use), upheld the excisability finding as earlier recorded, and allowed the appeals only to the extent of reducing the penalties as stated in the order. Issues involved: Whether exemption under Notification No. 1/93-C.E. and Notification No. 214/86-C.E. is available to the goods manufactured by the appellants.Summary:In the four appeals before the Appellate Tribunal, the common issue was the availability of exemption under Notification No. 1/93-C.E. and Notification No. 214/86-C.E. for goods manufactured by the appellants. The appellants manufactured untrimmed sheets/circles of copper, copper alloys on a job work basis without paying excise duty. The demand for excise duty was confirmed by the Assistant Commissioner and Commissioner (Appeals). The Assistant Commissioner re-adjudicated the matters and confirmed the duty demand against all appellants, citing non-compliance with the conditions specified in the notifications. The appellants argued that the duty liability should lie with the supplier of raw materials as per the notifications. However, the Adjudicating Authority upheld the duty demand, leading to the reduction of penalties imposed on the appellants.The ld. Advocate for the appellants contended that the products manufactured were not liable to excise duty as they were not marketable, citing relevant case law and clarifications from the Principal Collector. On the other hand, the ld. DR argued that the appellants had not complied with the conditions of the notifications and were liable to pay excise duty on the manufactured goods. The Tribunal considered the submissions of both sides and upheld the duty demand, noting that the appellants had not provided evidence to prove compliance with the conditions of Notification No. 214/86. The Tribunal also clarified that the supplier of raw material was responsible for discharging duty on finished products, not on goods manufactured on a job work basis. Consequently, the penalty imposed on the appellants was reduced.In conclusion, the Tribunal upheld the demand for Central Excise Duty as confirmed by the Commissioner (Appeals) in the impugned orders, while reducing the penalties imposed on all appellants.