2004 (12) TMI 504 - AT - Central Excise

Summary

Issues:
Challenge to impugned order-in-appeal dropping proceedings against respondents for clearing IC engines as PD pump sets without duty payment.

Analysis:
The appeal challenged the impugned order-in-appeal by the Revenue, which dropped proceedings against the respondents for allegedly clearing IC engines as PD pump sets without paying duty. The show cause notice dated 14-1-1999 initiated proceedings against the respondents, alleging that they cleared IC engines as exempt PD pump sets without duty payment during the period from 11-2-1997 to 4-6-1997. However, the Tribunal found these allegations unsubstantiated on the record. The notice referred to a specific challan dated 4-6-1997, where the goods were described as IC engine + PD pump + Tool box. Despite these allegations, no duty demand was raised for the IC engines cleared as PD pumps. Consequently, the Tribunal held that without a duty demand, neither confiscation of goods nor penalty imposition could be justified. The respondents had already reversed the Modvat credit availed on inputs used in manufacturing PD pumps exempt from duty during the relevant period.

Furthermore, the Tribunal cited Board Circular No. 224/58/96-CX dated 26th June 1996, clarifying that IC engines could be considered integral parts of PD pumps. Therefore, even without considering the specific circumstances, no duty could be demanded by the Revenue for IC engines cleared alongside PD pumps by the respondents. Given these facts and the circular, the Tribunal found no illegality in the order of the Commissioner (Appeals) and upheld the decision. Consequently, the appeal of the Revenue was dismissed by the Tribunal.