2012 (5) TMI 531

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....ant manufacture Crankshafts for different customers like TATA, HMT & Escorts Limited (Tractor Division). While the Crankshafts for TATA & HMT were being manufactured from billet stage i.e. first the billets are converted into forging and, thereafter, the forgings are subjected to machining for manufacture of fully finished Crankshafts, the Crankshafts for Escorts Ltd. were being manufactured out of rough castings received from them which were being subjected to the machining in the factory of the appellant. For manufacture of crankshafts for Escorts, M/s. Escorts Ltd. were sending duty paid inputs (rough castings), in respect of which they have availed cenvat credit, to the appellants under Job Work Challans under Rule 4(5)(a) of the Cenvat....

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....ry of interest on this duty under Section 11AB and imposition of penalty on the appellant under Section 11AC and penalty under Rule 26 of the Central Excise Rules, 2002 on M/s. Escorts. This show cause notice was adjudicated by the Commissioner, Central Excise, Noida vide Order-in-Original dated 25-3-2011 by which the duty demand of Rs. 1,98,12,707/- was confirmed against the Appellant along with interest and besides this, penalty of equal amount was imposed on them. Penalty of Rs. 25 Lakhs was also imposed on M/s. Escorts under Rule 26 of the Central Excise Rules, 2002. Against this order of the Commissioner (Appeals), this appeal along with stay application has been filed by the appellant. 2. Heard both the sides in respect of sta....

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....he condition that the principal manufacturer, that is, M/s. Escorts Ltd. discharges duty liability on the goods cleared by the appellant to them or on the finished goods cleared by M/s. Escorts in the manufacture of which crankshafts have been used, that crankshafts cleared by the appellant to M/s. Escorts had been used in the manufacture of engines, which, in turn, were used by M/s. Escorts in the manufacture of tractors, that during the period of dispute when the tractors were fully exempt from duty, M/s. Escorts should have paid the duty on the engines but they have not discharged the duty liability on the engines and, therefore, on account of failure of M/s. Escorts to discharge the duty liability on the engines, the crankshafts manufac....