2005 (7) TMI 397

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....hort) despatched 105.8 MTs and 48.975 MTs of soda ash to M/s. Kiran Silicate (P) Ltd. (KSL, for short) and M/s. Nannilam Silitcate (P) Ltd. (NSL, for short) respectively in September, 1992 for conversion to soluble glass on job work basis in terms of Rule 57F of the Central Excise Rules, 1944. The job workers viz. KSL & NSL processed the input and supplied respectively 190.44 MTs and 88.155 MTs of soluble glass to "SI". The principal manufacturer (SI) found the goods defective and returned the same to the job workers for re-processing. KSL & NSL could not re-process the soluble glass and, therefore, they treated it as "waste" and sold it to third parties on payment of duty at the rate of 5% by availing SSI concession. For this payment of du....

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....SSI units, upon finding that they were unable to reprocess the soluble glass returned by the principal manufacturer, disposed it of as "waste" on payment of duty @ 5% (concessional rate applicable to SSI unit). For a non-SSI unit, the applicable rate of duty was 15%. The lower authorities have demanded the differential duty on the soluble glass [@ 10%] from SI. This demand is under challenge in the appeals filed by SI. I find that SI recovered their cost of soda ash (input supplied to job workers for conversion into soluble glass) from KSL & NSL by issuing debit notes to them in March, 1993. This conduct of SI had the effect of breaking the chain of transactions under Rule 57F and consequently disentitled themselves to the benefit of the sa....

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....I abandoned it and recovered their cost of soda ash from the job workers. In these circumstances, the penalties imposed on SI are on the higher side. In the result, Appeal Nos. E/262/2003 & E/264/2003 filed by SI get disposed of in the following manner :- (a)    It is held that SI is liable to pay the differential duty on soluble glass removed from their factory to the premises of KSL & NSL and subsequently disposed of by the latter on payment of duty at concessional rate. (b)    The original authority is directed to re-quantify demand of duty after allowing the benefit of Section 4(4)(d)(ii) of the Central Excise Act to the assessee. (c)    The penalties imposed on the appellants are re....