2004 (7) TMI 496 - AT - Central Excise

Summary

Issues: Application for waiver of pre-deposit of Central Excise duty and penalty.

Waiver of Pre-deposit of Central Excise Duty:
The case involved an application by M/s. Khaitan Electricals Ltd. for the waiver of pre-deposit of Central Excise duty amounting to Rs. 10,16,233/- and an equal amount of penalty. The appellant, represented by Shri S. Ganesh, argued that they manufacture electrical fans and power-driven pumps, sending HR/CR sheets to job workers for manufacturing laminations used in both products. While HR/CR sheets for electrical fans were sent under Rule 57F(2), those for P.D. pumps were sent without following the same procedure as they were exempt from duty. The appellant maintained separate records for raw materials of both products. The Revenue confirmed duty demand on laminations for P.D. pumps, although they were manufactured by job workers. The appellant contended that any duty liability on the lamination should be on the job workers, not on them as they only supplied raw materials.

Opposition and Decision:
On the other hand, Shri H.C. Verma, representing the Respondent, opposed the prayer for waiver. It was argued that the appellant, in their application for permission to remove inputs under Rule 57F(2), had stated they would clear scrap after paying Central Excise duty. However, they did not pay duty on the scrap or discharge the duty liability on laminations used in P.D. pumps, which were duty-exempt. The Revenue contended that the appellant was not entitled to the benefits of Notification No. 240/86-C.E. or 67/95-C.E. The Tribunal considered both sides' submissions and noted that the laminations in question were manufactured by job workers. Consequently, the Tribunal found that the appellant had a strong prima facie case in their favor. As a result, the recovery of the entire amount of duty and penalty was stayed during the appeal's pendency, which was scheduled for regular hearing on 27-9-2004.