2006 (8) TMI 356 - AT - Central Excise

Summary

Issues:
1. Demand of duty and penalty on M/s. Salem Weld Mesh.
2. Denial of exemption under Notification No. 83/94-C.E. to the assessee.
3. Requirement of undertaking under Notification No. 83/94-C.E.
4. Eligibility of the appellants for the benefit of Notification No. 83/94-C.E.
5. Input duty credit allowance by the ld. Commissioner.
6. Waiver of pre-deposit and stay of recovery of duty and penalty amounts.

Analysis:

1. The ld. Commissioner demanded duty of over Rs. 62 lakhs from M/s. Salem Weld Mesh for the period 1-4-2001 to 18-12-02 and imposed an equal amount of penalty. The demand was made after denying the benefit of exemption under Notification No. 83/94-C.E. The assessee, a job worker, manufactured weld mesh for poultry cages but failed to produce the required undertaking from the principal manufacturer.

2. The denial of exemption was based on the absence of an undertaking from the poultry farm owners regarding the use of the weld mesh in the manufacture of poultry cages. The ld. Commissioner held that the poultry farm owners did not qualify as "manufacturers" under the notification, thereby disallowing the benefit to the job worker. The appellants claimed that the undertaking was a procedural requirement and the actual use of the goods in manufacturing poultry cages should suffice.

3. The Tribunal found that the appellants were prima facie eligible for the benefit of Notification No. 83/94-C.E. during the disputed period concerning the supply of weld mesh to the poultry farm owners. The view that the poultry farm owners were not manufacturers was deemed untenable, given the admitted use of the goods in the fabrication of poultry cages.

4. It was revealed that the ld. Commissioner was inclined to allow input duty credit to the assessee and directed the Assistant Commissioner to reevaluate the duty demand. The appellants argued that the input duty credit available exceeded the duty demand, indicating no payment due. This submission was considered reasonable at the current stage.

5. Consequently, the Tribunal granted a waiver of pre-deposit and a stay of recovery concerning the duty and penalty amounts, providing relief to M/s. Salem Weld Mesh in the ongoing dispute. The decision was dictated and pronounced in open court, ensuring transparency and adherence to legal procedures.