2004 (10) TMI 431 - AT - Central Excise

Summary

Issues:
1. Whether the demand raised by the department on the party towards re-rubberised rollers is sustainable.
2. Whether the rules invoked by the department for recovering from the respondents 8% of the price of re-rubberised rollers are applicable.
3. Whether the expunction of credit on inputs contained in compounded rubber used for job work is justified.

Analysis:

Issue 1:
The department raised a demand on the party for re-rubberised rollers treated as excisable goods exempt from duty. The original authority confirmed the demand and imposed a penalty. The Commissioner (Appeals) later allowed the appeals, leading to the present appeals by the Revenue. The Revenue treated the re-rubberised rollers as exempted final products under specific rules. The respondents contested this treatment, arguing that re-rubberisation did not amount to manufacture. The Tribunal found that the job work did not amount to manufacture, thus the demand was unsustainable. The Commissioner (Appeals) rightly set aside the demand.

Issue 2:
The key question was the applicability of the rules invoked by the department for recovering 8% of the price of re-rubberised rollers. The respondents argued that re-rubberisation did not constitute manufacture under the Central Excise Act. The Tribunal found that the rules were not applicable as the job work did not amount to manufacture, and the rules were meant for situations where both dutiable and exempted final products are manufactured simultaneously, which was not the case here. Therefore, the demand for 8% of the price of re-rubberised rollers was deemed unsustainable.

Issue 3:
Regarding the expunction of credit on inputs used for job work, the respondents had a longstanding practice acknowledged by the department. The Tribunal found that the expunction was based on an accepted formula, and as no alternative formula was suggested by the Revenue, the expunction of credit was deemed justified. The Tribunal cited a Supreme Court decision to support this conclusion.

In conclusion, the appeals were rejected as they lacked merit, and the Tribunal upheld the decisions of the Commissioner (Appeals) regarding the unsustainable demand and justified expunction of credit.