Job-work processing and R.G. 1 non-accountal: duty demand failed, confiscation upheld, and penalty was reduced.

Mere job-work processing did not make the appellant the manufacturer where the raw materials belonged to another concern, the processed goods were returned under challans, and the department failed to prove clandestine removal or non-payment of duty; the demand on 2645 drums was therefore set aside. By contrast, 330 coils found in pre-measured, labelled condition were treated as fully manufactured excisable goods, and non-entry in the R.G. 1 register justified confiscation. In view of the mixed result, the composite penalty was moderated: the redemption fine of Rs. 5,000 was maintained and the personal penalty was reduced to Rs. 10,000.

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Issues: (i) whether duty could be demanded on 2645 drums of electrical wires and cables on the footing that they were manufactured and cleared by the appellant without licence and without payment of duty; (ii) whether the seized 330 coils of electrical wires and cables were liable to confiscation for non-accountal in the R.G. 1 register; and (iii) whether personal penalty and redemption fine were warranted and, if so, to what extent.

Issue (i): whether duty could be demanded on 2645 drums of electrical wires and cables on the footing that they were manufactured and cleared by the appellant without licence and without payment of duty.

Analysis: The evidence showed that the raw materials were supplied by M/s. Krishna Electrical Industries, the appellant acted on job-work basis, the processed goods were returned under challans, and the subsequent testing, reeling and packing were undertaken by M/s. Krishna Electrical Industries. The material on record, including the statements of the concerned partners, supported the view that the appellant was not the manufacturer and that the duty liability, if any, lay elsewhere. The department did not establish clandestine removal or prove that duty had not already been discharged on the goods in question.

Conclusion: The demand of duty on 2645 drums was not sustainable and was set aside in favour of the assessee.

Issue (ii): whether the seized 330 coils of electrical wires and cables were liable to confiscation for non-accountal in the R.G. 1 register.

Analysis: The seized coils were found in pre-measured lengths with tags and labels attached and were not shown to be waste or scrap. The Board's instructions on entry in the R.G. 1 register treated such reels as complete once the measured length had been wound and labelled. The Tribunal held that the goods were fully manufactured wires, that non-entry in the R.G. 1 register constituted a violation, and that the plea of incompleteness pending further tests did not displace the finding of excisability.

Conclusion: The confiscation of the 330 coils was upheld against the assessee.

Issue (iii): whether personal penalty and redemption fine were warranted and, if so, to what extent.

Analysis: In view of the mixed outcome, the confiscation being sustained but the duty demand failing, the penalty required reconsideration. The value of the seized coils was comparatively modest, and the circumstances justified moderation of the composite penalty while maintaining the redemption fine on the seized goods.

Conclusion: The redemption fine of Rs. 5,000 was upheld and the personal penalty was reduced to Rs. 10,000.

Final Conclusion: The appeal succeeded only in part: the duty demand on the 2645 drums failed, but the confiscation of the 330 coils was sustained with a reduced personal penalty and the existing redemption fine maintained.

Ratio Decidendi: Mere processing on job-work basis does not make the appellant the manufacturer where the raw materials belong to another concern and the evidence shows return of processed goods to that concern, but goods found fully manufactured and not accounted for in the prescribed register remain liable to confiscation and penalty.

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