2004 (3) TMI 638 - AT - Central Excise

Summary

Issues:
1. Confirmation of demand under Section 11A of the Central Excise Act, 1944.
2. Imposition of penalty under Rule 173Q of the Rules ibid.
3. Interpretation of Board's Circular regarding duty on pipes used in assembly of pipelines.

Confirmation of Demand under Section 11A:
The judgment pertains to an appeal against Order-in-Original No. 25/99 confirming a demand of Rs. 39,59,525 under Section 11A of the Central Excise Act, 1944 on the appellant. The appellant argued that duty should not be paid for using M.S. Pipes in assembling pipelines on-site, citing a Board's Circular. However, the Revenue contended that duty should be paid on pipes manufactured in the factory and taken to the site without payment. The Tribunal, after considering submissions and the Circular, held that duty must be paid on pipes manufactured without a license and cleared to the site without appropriate duty payment. The order confirming the duty demand was upheld.

Imposition of Penalty under Rule 173Q:
In addition to confirming the duty demand, a penalty of Rs. 5 lakhs was imposed on the appellant under Rule 173Q of the Rules ibid for not disclosing the clearance of goods without duty payment and absence of a license. The Tribunal acknowledged the imposition of the penalty but reduced it to Rs. 2.5 lakhs considering the overall circumstances of the case. The penalty modification was the only alteration made, with the appeal being rejected in all other aspects.

Interpretation of Board's Circular:
The appellant relied on a Board's Circular stating that duty exemption applies to pipes used at the site for pipeline fabrication. However, the Revenue argued that the Circular is limited to cases where pipes are both manufactured and used on-site, not for pipes manufactured in a factory and then taken to the site. The Tribunal agreed with the Revenue's interpretation, emphasizing that duty must be paid on pipes manufactured without a license and cleared without duty payment. The Circular did not exempt the appellant in this scenario, leading to the confirmation of the duty demand and penalty imposition.

In summary, the judgment upheld the duty demand under Section 11A of the Central Excise Act, 1944, imposed a penalty under Rule 173Q, and interpreted the Board's Circular to require duty payment on pipes cleared to the site without appropriate payment, despite arguments for duty exemption based on the Circular.