2002 (10) TMI 676 - AT - Central Excise

Summary

Issues:
Differential duty demand, confiscation, and penalties on the appellants for alleged short levy of duty in respect of contract supplies.

Analysis:
The judgment by the Appellate Tribunal CEGAT, New Delhi pertains to two appeals concerning differential duty demand, confiscation, and penalties imposed on the appellants for alleged short levy of duty in relation to contract supplies. The appellants, a small-scale unit manufacturing Electrical Distribution Control Panels, undertook contracts involving design, fabrication, erection, and commissioning of such panels at certain parties' premises. The dispute arose from the alleged short levy of duty on the contract supplies, where the appellants purchased some parts from other manufacturers and issued two sets of invoices for the contracts. The Central Excise authorities discovered that the appellants had actually manufactured entire control panels in their factory, contrary to what was declared in the invoices and excise duty documents. This discovery led to investigations, culminating in the issuance of a show cause notice alleging duty evasion by the appellants.

The judgment discusses the evidence presented by both sides, with the Commissioner of Central Excise holding that the appellants misrepresented facts by claiming to manufacture only "Panel frame" in their factory while actually producing full control panels. The Commissioner concluded that duty was payable on the entire value of the control panels, with only the cost of erection at the purchaser's premises being deductible. The appellants argued that they were liable to pay duty only on parts manufactured in their factory, a contention not disputed by the department. However, the department contended that the appellants misrepresented facts and committed fraud on the revenue.

The tribunal examined specific contracts, such as those with the Escort Heart Institute and Northern Railway, where correspondence between the appellants and buyers indicated full control panels were manufactured in the factory. Statements made during investigations further supported the fact that full equipment, not just panel frames, were produced in the factory. The tribunal found that the appellants were liable to pay duty on the entire value of the goods manufactured in their factory, rejecting the appellants' attempt to transfer the value of goods to non-excisable activities through false documentation.

In conclusion, the tribunal upheld the findings of the impugned orders, including duty demand, confiscation, and penalties, as reasonable given the evidence of deliberate fraud committed by the appellants. The penalties imposed were deemed appropriate considering the legal provisions and the gravity of the offense. Ultimately, the appeals were found to lack merit and were rejected.