2007 (4) TMI 558 - AT - Central Excise

Summary

Issues:
1. Duty demand confirmation and penalties imposed under Central Excise Act, 1944.
2. Confiscation of saleable steel and redemption.
3. Interpretation of the phrase "in relation to the manufacture" in Notification No. 67/95-C.E.
4. Exemption eligibility for impugned goods used in the manufacture of finished goods.
5. Penalty determination for non-maintenance of accounts and non-payment of duty.

Analysis:
1. The Adjudicating Commissioner confirmed a duty demand of Rs. 10,82,86,891 against the appellants and imposed penalties under Section 11AC and Rule 173Q of the Central Excise Act, 1944. The Commissioner also ordered the confiscation of 50769 MTs of saleable steel, allowing redemption upon payment of Rs. 2.00 Crores.

2. The advocate for the appellants argued that the confiscated goods were not available or seized, and a portion of the steel had already been used for purposes other than manufacturing finished products, on which duty had been paid voluntarily. The remaining quantity was utilized in the production of finished iron and steel products, making them eligible for exemption under Notification No. 67/95-C.E. The Commissioner's reasoning for denial was based on a strict interpretation of the phrase "in relation to the manufacture," which was challenged citing a previous Tribunal decision allowing a liberal construction of the same phrase.

3. The Tribunal found that the appellants were entitled to exemption for the balance quantity of impugned goods (50269 MTs) used in the manufacture of finished goods, except for the 500 MTs already subjected to duty payment. The duty demand related to the paid quantity was confirmed, while the remaining demand was set aside. Penalties under Section 11AC and confiscation were also set aside due to lack of seizure. A reduced penalty of Rs. 1.00 lakh was imposed for non-maintenance of accounts and delayed duty payment on the 500 MTs.

4. The Tribunal allowed the appeal, granting exemption for the balance quantity of impugned goods used in manufacturing finished products, reducing the penalty amount, and disposing of the Stay Petition accordingly.