2003 (12) TMI 401 - AT - Central Excise

Summary

Issues:
Appeal against order confirming duty demand, confiscation of property, and imposition of penalties by Commissioner of Central Excise & Customs.

Detailed Analysis:

Issue 1: Duty Demand and Confiscation of Property
The main appeal (E/2638/98) by M/s. Uma Engineering Pvt. Ltd. (UEPL) challenges the duty demand, confiscation of property, and penalties imposed by the Commissioner. UEPL argues that it is solely engaged in trading activities and does not have a manufacturing license or engage in manufacturing any items. The show cause notice alleged that UEPL, a company, created associate firms manufacturing textile machinery and parts, and as UEPL negotiated complete machines with customers and received full payment, it was deemed a manufacturer liable for duty on the entire machine value. UEPL countered by stating it procured machinery framework from manufacturers, purchased essential components from the market, and did not engage in manufacturing activities. The Commissioner, however, confirmed the duty demand, rejecting UEPL's contentions.

Issue 2: Allegation of Undervaluation
The Commissioner found that UEPL was formed by manufacturing units to undervalue textile machines by splitting the machine value into two parts. The Commissioner concluded that UEPL should be treated as a manufacturer due to its relationship with the manufacturing units and held UEPL responsible for central excise duty under the premise of undervaluation. However, the Tribunal noted discrepancies between the show cause notice and the Commissioner's findings, emphasizing that UEPL's trading activities did not warrant excise duty liability. The Tribunal disagreed with the Commissioner's interpretation, stating that UEPL's involvement in trading, sourcing components, and supplying to customers did not constitute undervaluation or manufacturing activities.

Issue 3: Liability of Other Noticees
The Commissioner's decision to hold UEPL liable for duty, confiscation, and penalties while not imposing any demand on the manufacturing units was challenged. The Tribunal found that since UEPL was engaged in trading and not manufacturing, the duty demand against it was unjustified. Consequently, the appeals filed by UEPL and other noticees were allowed, setting aside the Commissioner's order and directing the respondent to refund the deposited amounts.

In conclusion, the Tribunal ruled in favor of UEPL and other noticees, emphasizing that UEPL's trading activities did not warrant excise duty liability. The judgment highlighted the discrepancy between the show cause notice and the Commissioner's findings, ultimately leading to the decision to allow the appeals and refund the deposited amounts.