2006 (9) TMI 330 - AT - Central Excise

Summary

Issues involved: Duty demands, penalties imposed, reprocessing of goods without proper permission, interpretation of law regarding manufacturing process.

Duty demands and penalties imposed: The appeals were filed against the order of the Commissioner (Appeals) that went against the Revenue. Duty demands were confirmed and penalties imposed on the ground that manufacturing process was undertaken when goods were returned, not covered under rule 173H.

Reprocessing of goods without proper permission: Assessees received excisable goods for reprocessing without proper permission, leading to demand notices issued for violation of rules. Assessees defended that unsold pesticides were returned for reprocessing due to shelf life and quality issues, with prior declaration to the department.

Interpretation of law regarding manufacturing process: Commissioner (Appeals) noted that assessees received duty paid goods for reprocessing under rule 173H, seeking permission from authorities. Commissioner found that the nature of reprocessing indicated manufacturing was involved, leading to penalties being set aside based on lack of mala fide intent and interpretation of law.

The authorized representative for the department argued against setting aside penalties, stating no valid reason for doing so. However, the Commissioner (Appeals) set aside penalties imposed in the original order due to lack of evidence of evasion of duty and the issue involving interpretation of law.

It was observed that the assessees maintained proper records of goods received back for reprocessing, as required under Rule 173L. Refund of duty is allowed when goods are subjected to processes like re-making or refining, with detailed accounts maintained. Since no evidence suggested failure to maintain such accounts, the penalties were rightfully set aside, and the appeals were dismissed on the grounds that manufacturing processes were indeed involved in the returned goods.