2005 (5) TMI 366 - AT - Central Excise

Summary

Issues: Duty demands on processor of grey fabrics, penalties imposed on the processor, applicability of Rule 209A of Central Excise Rules, exemption under Rule 174 for job work basis processing, failure to authorize processing unit for Central Excise formalities, liability for dealing in non-duty paid goods, penalty reduction.

In this case, the appeal was filed against an order confirming duty demands on the processor of grey fabrics and imposing penalties. The appellant procured grey fabrics from the market, sent them to a processing unit, and received them back after processing. The penalties were imposed under Rule 209A of the Central Excise Rules for dealing in goods known to be non-duty paid and liable for confiscation. The Tribunal noted that the appellant was getting goods processed on a job work basis, exempt from Rule 174 if the processing unit followed Central Excise formalities on the appellant's behalf. However, the appellant failed to provide the necessary declaration, and it was established that processed fabrics were received without proper duty payment documentation. Consequently, the Tribunal upheld the penalty under Rule 209A but reduced it to Rs. 1,00,000 considering the circumstances. The appeal was partly allowed based on these findings.