TaxTMI 
TaxTMI 
2019 (2) TMI 310
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.... In exercise of the powers conferred by sub-rule (1) of rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts goods of the description specified in column (3) of the Table hereto annexed and falling under heading Nos. or sub-heading Nos. of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) as are specified in the corresponding entry in column (2) of the said Table, from so much of the duty of excise leviable thereon which is specified in the said Schedule, as is in excess of the amount calculated at the rate specified in the corresponding entry in column (4) of the said Table. S.No. Heading No./subheading No. Description of goods Rate (1) (2) (3) (4) 01 7325.10 Castings and cast articles of iron Rs.80 per tonne 02 7325.20 7325.30 and 7325.90 Castings and cast articles of steel Rs.365 per tonne 03 Any heading or sub-heading of Chapters 84 85 86 or 87 Castings and cast articles of iron or steel Rs.500 per tonne 04 Any heading or sub-heading of Chapters 84 85 86 or 87 Forgings and forged articles of steel. Rs.750 per tonne Provided that the said goods have not....
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.... 23.6.88. The team found that the castings/cast articles were subjected to boring, welding and gauging, which being applied to transform the rough castings into specific parts having specific dimensions as per the drawings and not merely to remove surface defects or removal of excess material which being not permissible process in terms of the proviso to the Notification No.223/88, the benefit of concessional rate of duty as per notification would not be applicable. Show Cause Notice, bearing C.No.V(86)15- 1/94/Adj-I/64481 to 486 dated 28.09.1994 (read with the Corrigendum bearing even no.70214 to 216 dated 09.11.1994 and Addendum bearing even No.63655 dated 31.12.1996) was issued to noticee as to why: (i) Central Excise Duty amounting to Rs. 1,12,31,487/- (Basic Excise Duty Rs. 1,06,87,407.80 + Special Excise Duty Rs. 5,44,079.30) for the period Nov' 1989 to May' 1994 should not be recovered from them under Proviso to Section 11A of the Central Excises & Salt Act, 1944. (ii) Penalty should not be imposed under Rule 173Q of the Central Excise Rules, 1944. (iii) Penalty should not be imposed under Section 11AC of the Act. (iv) Interest should not be recovered ....
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.... held by Assistant Collector's order dated 25.09.1992 that the product "Armature casing" was an unmachined casting on which benefit of Notification No.223/88 was available. Such grant of benefit cannot evidently be generalised and made applicable to all unmachined cast articles manufactured by noticee. 30.4 In view of above discussions, it is established that the noticee has suppressed the fact of subjecting the castings to drilling/boring and welding and misdeclared them as unmachined castings with the sole intention to evade payment of appropriate duty. Therefore, extended period of 5 years is invokable in the instant case. The case laws cited by the noticee regarding limitation of demand, do not come to their aid." Be it noted that the issue as to notice being premature and the limitation was not carried further and not challenged by the respondent/noticee. As regard to entitlement of benefit of concessional rate of duty under Notification dated 23.06.1988, the Adjudicatory Authority found that the respondent was not entitled for the benefit as the castings and cast articles of steel (other than stainless steel) was subjected to process other than those specified in....
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....pellants company, his answer to a query made on behalf of the Deptt. cannot be interpreted in a manner which is sought to be interpreted by the Department. The statement has to be understood in the context in which it has been made. The question was specifically to the effect as to whether drilling operation was done on cast articles. In that context it was answered by the deponent that whenever drillings were required to be done on cast articles, the same were done as mentioned in the drawings supplied by the railway authorities. This cannot be construed to mean that each and every cast article was subjected to drilling. The appellants were manufacturing cast articles as well as fully machined articles and had been submitting their declarations in that regard from time to time to the Department. In those circumstances, the entire testimony of the witness being read as a whole, we do not find any supporting material to the allegations made by the department against the appellants. The findings arrived at by the Commissioner on the basis of said reply in the testimony of the witness clearly amounts to misconstruction and misunderstanding of the statement of the witness. The statemen....
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....nial of benefit to the appellants under Notification No.223/88 in relation to the product in question for the relevant period cannot be sustained and are liable to be set aside. For the same reason, demand for duty cannot be sustained and consequently, question of imposition of penalty does not arise." The challenge is on the ground that the findings arrived at by the Tribunal are perverse. Whereas, the respondent supports the verdict. It is in this factual background the substantial question of law, referred to supra arises for consideration. As per Section 35G, an appeal to High Court lie from every order passed in appeal by the Appellate Tribunal, if it is satisfied that the case involves a substantial question of law. In "Sir Chunilal V. Mehta and sons Ltd. Vs. Century Spinning and Manufacturing Co. Ltd. [AIR 1962 SC 1314]", it is held that: "6. ...........The proper test for determining whether a question of law raised in the case is substantial would, in our opinion, be whether it is of general public importance or whether it directly and substantially affects the rights of the parties and if so whether it is either an open question in the sense that it is n....
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....out this it is not possible to completely manufacture the said produce. After welding, the said articles are subjected to grinding. Thus, the department dwelt upon only noticed (impugned/questioned) cast article which were subjected to manufacturing process and not all the cast articles. The Tribunal glossed over the fact on record that the unit was under Self Removal Procedure (SRP) whereunder it is not mandatory for the department to verify physically each and every article before clearance. It was, therefore, incumbent upon the noticee to have placed for physical verification the impugned article. The Tribunal lost sight of the fact that the Adjudicatory Authority drew an example of "Armature Casing" and unmachined casting which was placed for verification whereon the benefit of Notification No.223/88 was granted. This article, the Authority found, was not subjected to the Show-Cause Notice. Thus, the Show-Cause Notice and the adjudication thereon has been erroneously construed by the Tribunal that all the cast-articles were subjected to notice. The findings in paragraph 15 of the decision by the Tribunal is, thus, not sustainable. Furthermore, the Tribunal in paragr....
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....omponents/parts both assembled and individual parts eg coupler assembly, Boge assembly, kinucle, lock, coupler body, plunger etc. Q.3. Please explain the manufacturing process of fully machined Railway Parts and other Railway parts from the stage of melting and casting? Ans. Scrap purchased from outside is being melted in electric arc furnace and molted steel is poured into the mould. Moulds are being prepared as per the drawings and designs supplied by the Railway authorities. With the help of vibrating machine, sand is removed and then casting are subjected to gas cutting to remove runner and risers. Then felting is done. After that heat treatment is given like annealing, normalizing, tempering etc. At this stage it becomes cast articles. Cast articles so manufactured are then subjected to full machining in case of fully machined components/parts. In all other cases these cast articles are subjected to gauging and finishing work. Q.4 Please explain gauging and finishing and different involved in it stage wise. Ans. Cast articles are subjected to grinding with the help of swing frame grinder and then cutting of excess material is being done. Then they are subjected ....
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....This is done to check the correctness of casting before supply. Q.11. Whether you supply assembled parts or individual parts? Ans. We are supplying both types. Q.12. What is the nature of supply of fully machined parts and cast articles? Ans. Supply of casting & cast articles are more than that of fully machined parts. I cannot determine the ratio as it depends on the orders of the Railway. Cast articles are invariably subjected to gauging and grinding. Q.13. Whether the process of gauging etc is done to remove surface defects or excess materials or to achieve the precise dimensions required by the customers? Ans. Gauging is done to achieve the required dimensions only." The Tribunal, as is evident from the findings in paragraph 16 of its judgment, erred in construing that the statement of Shri B.S. Bhadoria is to be understood in general manner as to the process. It glossed over the aspect that the entire supply was to the Railways of fully machined Railway components/parts and other Railway components/parts from the stage of melting and casting. It was the later components/parts which were found subjected to drilling and welding. The Adjudicatory Authority on....
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.... Industries [(2003) 4 SCC 184]" reliance whereon is placed by the respondent, the issue was as to goods become excisable merely because it falls within a tariff item. Their Lordships were dwelling on the Tariff Item 1507.00 which after 1985 read as "residues resulting from the treatment of fatty substance". And that the "spent earth" being a residue would be excisable. Whether twin tests of "manufacture and marketability" cease to apply if a goods falls within a tariff entry. In this context, it was observed: "3. Prior to this entry being introduced in 1985, it had been consistently held that "spent earth" was not manufactured. It had been consistently held that "spent earth" remained "earth" even after processing. It had been consistently held that all that happened was that its capacity to absorb was reduced. It had been consistently held that duty having been paid on "earth", no duty was leviable on "spent earth" as it remained the same product. It had been held that to levy duty on "spent earth" would amount to levying duty twice. It is on this ground that it has been held that "spent earth" was not excisable. Even now it has not been shown that there is manufacture. The ....
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.... is manufacture and that what is manufactured is on the Revenue. In this case no new evidence is placed to show that there is manufacture. "Spent earth" was "earth" on which duty has been paid. It remains earth even after the processing. Thus if duty was to be levied on it again, it would amount to levying double duty on the same product." In the case at hand, as evident from the material evidence on record that the department duly established the twin test of "manufacture and marketability". The department having discharged the burden, the onus shifted on the respondent to have contradict that the impugned cast articles which were marketed (to Railways) were not subjected to process of manufacturing. Similarly, the decision in "Vasantham Foundry Vs. Union of India and others [(1995) 5 SCC 289]" relied by respondent is of no assistance in given facts of present case. In Vasantham Foundary (supra), their Lordships were dwelling on the issue as to whether the 'cast iron' in the list of declared goods in the Tamil Nadu General Sales Tax Act would include "cast iron castings". In the context thereof, it was held: "15. In our judgment, this contention must be upheld. Wh....