2006 (8) TMI 416 - AT - Central Excise

Summary

Issues:
Demand of duty and penalty on aluminium circles cleared from factory during 2004-05, waiver of pre-deposit and stay of recovery.

Analysis:
The lower authorities demanded a sum from the appellants regarding aluminium circles cleared from their factory in 2004-05, with penalties imposed and subsequently reduced. A separate penalty was also imposed on the proprietor of one of the manufacturing units. The applications sought waiver of pre-deposit and stay of recovery for the duty and penalty amounts.

Upon examination, it was discovered that two manufacturing units, M/s. Devi Metal Works and M/s. Ganesh Industries, operated in adjacent premises during the relevant period. The proprietors were brothers. M/s. Ganesh Industries operated under a compounded levy scheme, while M/s. Devi Metal Works chose to discharge duty liability differently. M/s. Ganesh Industries allowed M/s. Devi Metal Works to conduct part of the manufacturing activity on a job-work basis during a period when their own cold-rolling machine was inactive. The goods processed by M/s. Devi Metal Works were cleared on payment of duty at a different rate, and no duty was paid on the job-worked goods. Despite this, the Department demanded duty from M/s. Devi Metal Works on the job-worked goods, overlooking the duty already paid by M/s. Ganesh Industries for the same goods.

The Tribunal found that M/s. Ganesh Industries were entitled to engage job workers for their manufacturing activity under the compounded levy scheme. As M/s. Ganesh Industries were already paying duty as required, they could not claim abatement. Conversely, M/s. Devi Metal Works, as a job-worker, should not be liable for duty on the job-worked goods since duty was paid by M/s. Ganesh Industries. Therefore, the stand taken by the lower authorities was deemed unsustainable in law, leading to the waiver of pre-deposit and stay of recovery for the duty and penalty amounts.

Additionally, it was brought to light that the Department had attached final products seized from M/s. Devi Metal Works and intended to auction-sell them. A certified copy of the attachment order was requested to be issued. The order was dictated and pronounced in open court.