2006 (1) TMI 354 - AT - Central Excise

Summary

Issues:
Appeal against demands confirmed under Section 11D of the Central Excise Act regarding recovery of material cost on rejected quantity received from job worker.

Analysis:

1. Common Question of Law and Facts:
- Three appeals raised a common question of law and facts regarding the recovery of material cost on rejected quantity received from a job worker. The appellants received 3% to 5% cost towards waste and scrap and reversed the credit for accounting convenience. They contended that the recovery cost was fixed in 1994 based on material cost during that period, even though there was a considerable increase in raw material cost. The authorities confirmed the amounts demanded under Section 11D.

2. Interpretation of Section 11D:
- The learned Counsel argued that Section 11D was not attracted, citing a judgment by the bench in a similar case. The Tribunal considered the cited judgments, notably the case of Bripanil Industries Ltd., where it was held that Section 11D was not applicable in identical situations. The Tribunal further referred to the case of M/s. Rashtriya Ispat Nigam Ltd., where similar facts led to the conclusion that the demand cannot be raised against a person who has not collected duty.

3. Application of Precedent Judgments:
- The Tribunal analyzed the judgments cited and found that the demand under Section 11D could not be raised against the appellants as they had not collected duty. The Tribunal emphasized that the conversion agents/job workers had paid duty as per the rules, absolving the appellants of any liability under Section 11D. The Tribunal set aside the impugned orders and allowed the appeals based on the precedent judgments and the lack of evidence supporting the duty collection claim.

4. Operative Portion of the Order:
- The Tribunal, after considering the submissions and precedent judgments, pronounced the operative portion of the order in open court, setting aside the impugned orders and allowing the appeals. The decision was based on the lack of evidence showing duty collection by the appellants and the payment of duty by the conversion agents/job workers, absolving the appellants of liability under Section 11D.

This detailed analysis of the judgment highlights the key issues, legal interpretations, application of precedent judgments, and the final decision of the Appellate Tribunal CESTAT, Bangalore regarding the demands confirmed under Section 11D of the Central Excise Act.