2007 (5) TMI 459 - AT - Central Excise

Issues Involved:
1. Justification of demand of duty on 27,608 Kgs Copper Rods sent directly from the supplier to the job worker under Rules, 2001.
2. Compliance with procedural requirements under the Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001.
3. Validity of rejection of permission by the Commissioner of Central Excise.
4. Applicability of Rule 6 of Rules, 2001 and Section 11A of the Central Excise Act, 1944.
5. Relevance of export of finished goods in the context of duty-free procurement of raw materials.

Issue-Wise Detailed Analysis:

1. Justification of demand of duty on 27,608 Kgs Copper Rods:
The appellants procured 27,608 Kgs of Copper Rods duty-free and sent them directly to job workers without receiving them at their factory or obtaining necessary permission from the competent authority. The adjudicating authority confirmed the demand of duty of Rs. 3,75,548/- under Rule 6 of the Rules, 2001 read with Section 11A of the Central Excise Act, 1944, and imposed a penalty of Rs. 1,00,000/- under Rule 25 of the Central Excise Rules, 2002, along with interest. The Commissioner (Appeals) upheld this decision.

2. Compliance with procedural requirements under Rules, 2001:
The appellants argued that they substantially complied with the provisions of Rules, 2001, and the procedural lapse should not justify the demand of duty. They cited the case of CCE, Ludhiana v. Ralson India Ltd. to support their claim that procedural lapses should not attract duty demands. However, the Revenue contended that the appellants violated the conditions of the bond by not obtaining permission from the competent authority, thus justifying the demand of duty.

3. Validity of rejection of permission by the Commissioner of Central Excise:
The appellants claimed that the rejection of permission by the Commissioner of Central Excise was not communicated to them. However, it was noted that the Superintendent of Central Excise informed the appellants about the rejection through a letter dated 20-9-2004. Thus, the appellants were aware of the rejection and still proceeded to transfer the goods, making their argument about non-communication invalid.

4. Applicability of Rule 6 of Rules, 2001 and Section 11A of the Central Excise Act, 1944:
Rule 6 of Rules, 2001 states that if the subject goods are not used for the intended purpose, the manufacturer must pay the duty along with interest. Since the appellants did not follow the prescribed procedure, they were liable to pay the duty. The Tribunal referred to the case of Indofil Chemical Co. v. CCE, Mumbai, which emphasized the necessity of following procedural safeguards to avail exemptions.

5. Relevance of export of finished goods in the context of duty-free procurement of raw materials:
The appellants argued that they used the duty-free raw materials to manufacture finished goods that were exported, thus fulfilling the intended purpose. However, the Tribunal noted that compliance with procedural requirements is essential irrespective of the end use of the goods. The appellants' failure to follow the prescribed procedure invalidated their claim for duty exemption.

Conclusion:
The Tribunal upheld the orders of the lower authorities, concluding that the appellants violated Rules, 2001 by transferring duty-free raw materials directly to job workers without obtaining necessary permission. The appeal was dismissed, reinforcing the importance of adhering to procedural requirements for availing duty exemptions.

← Previous Next →