2004 (1) TMI 622 - AT - Central Excise

Summary

Issues:
Manufacture of M.S. Angles on job work conversion basis, denial of credit under Rule 57A, imposition of penalty under Rule 173Q(1)(bb).

Analysis:
The appellant manufactured M.S. Angles on job work conversion basis for a specific company. They issued duty paying invoices in the company's name but consigned the goods to themselves. The appellant availed credit under Rule 57A based on these invoices without physically removing the goods from the factory or filing D3 intimations. The credit availed was denied, and a penalty was imposed under Rule 173Q(1)(bb).

The tribunal found that even though the goods did not leave the factory premises, the movement within the factory for further processing should be considered as removal, citing a precedent from the Apex Court. The tribunal highlighted that after the amendment of Central Excise Rules, it is not necessary for an item to be physically removed from the place of manufacture to be subject to duty. Therefore, duty discharge on M.S. Angles within the factory for the customer was deemed acceptable.

Regarding the credit denial, the tribunal stated that there was no legal restriction on duty paid goods being transferred within the factory without physical removal. The failure of the customer to endorse the invoice did not disqualify the appellant from claiming credit. The tribunal concluded that the credit denial based on procedural issues or commercial suspicions was unwarranted.

The tribunal emphasized that if the goods were not physically removed, taking credit for duty payment was permissible as long as the invoices were properly accounted for. The tribunal also noted that there was no justification for imposing a penalty under Rule 173Q(1)(bb) since the goods were duty paid, and any discrepancies should have been addressed through correct accounting procedures.

In light of these findings, the tribunal set aside the previous order, allowing the appeal and ruling in favor of the appellant.