2005 (1) TMI 453 - AT - Central Excise

Summary

Issues:
1. Availment of modvat credit under Chapter V of the Central Excise Rules for sending steel scrap to job workers.
2. Applicability of Rule 57F(4) of the Central Excise Rules for sending scrap to job workers.
3. Demand of duty on steel ingots manufactured by job workers.
4. Time bar issue regarding the show cause notice.
5. Liability of duty on the manufacturer of steel ingots.

Analysis:
1. The appellants were alleged to have not availed the benefit of modvat credit under Chapter V of the Central Excise Rules for sending steel scrap to job workers. The Tribunal remanded the matter to the Adjudicating Authority to furnish a copy of the Panchnama under which the show cause notice was affixed at the factory gate. The Adjudicating Authority concluded that the benefit under Rule 57F(4) was not available to the appellants and confirmed the demand of duty on steel ingots.

2. The Advocate for the appellants argued that if Rule 57F(4) was not applicable, duty should have been demanded from the job workers who converted scrap into steel ingots. He cited previous Tribunal decisions to support his argument that duty should be demanded from the actual manufacturer of the ingots. The Tribunal agreed, stating that duty should have been demanded from the manufacturer of the steel ingots, not the supplier of the raw material. The Tribunal found no violation by the appellants to evade duty and set aside the penalty imposed.

3. The Department argued that the appellants wrongly availed the job work procedure under Rule 57F(4) and were liable for penalty. However, the Tribunal held that the appellants were not responsible for duty on the steel ingots as they were the suppliers of raw material, not the manufacturers. The Tribunal cited previous decisions to support its conclusion and ruled in favor of the appellants, setting aside the penalty.

4. The Tribunal found that the duty cannot be demanded from the appellants as they were not the manufacturers of the steel ingots. The Tribunal emphasized that the duty should have been demanded from the actual manufacturer, not the supplier of the raw material. As there was no violation by the appellants to evade duty, the penalty was also set aside.

5. In conclusion, the Tribunal ruled in favor of the appellants, setting aside the order of the Commissioner (Appeals) and allowing the appeal based on the finding that duty on the steel ingots should have been demanded from the manufacturer, not the supplier of the raw material.