2008 (5) TMI 512 - AT - Central Excise

Summary

Issues:
1. Liability of duty on Copper wires manufactured by an EOU.
2. Applicability of duty under Section 3 of the Central Excise Act, 1944.
3. Different definitions of manufacture for EOU and DTA units.
4. Penalty imposition for non-submission of re-warehousing certificate.

Analysis:

1. Liability of duty on Copper wires manufactured by an EOU:
The judgment revolves around the liability of duty on Copper wires manufactured by an EOU. The Adjudicating Authority demanded duty, interest, and penalty on mixed Copper Wire produced by the appellant. The authority considered the conversion of Copper rods into wires as manufacturing activity due to the LOP obtained by the unit. Failure to submit re-warehousing certificate or proof of goods return led to penalty imposition. The finished goods were deemed liable for duty, supported by the Development Commissioner's approval for sale in DTA with full duty payment requirement.

2. Applicability of duty under Section 3 of the Central Excise Act, 1944:
The main issue addressed was whether Copper wires produced from Copper rods by an EOU are subject to duty. The appellant argued that such conversion does not amount to manufacture, citing relevant case laws. The Tribunal concurred that duty arises under Section 3 of the Central Excise Act, emphasizing that goods not manufactured do not attract duty. The liability, in this case, was limited to duty payable under Notification No. 22/2003 for unproven input usage, ensuring duty payment on the original inputs.

3. Different definitions of manufacture for EOU and DTA units:
The judgment highlighted the inconsistency in defining manufacture for 100% EOU and DTA units. It was established that there should not be separate definitions, aligning with the ld. Advocate's argument. The liability of duty under the Central Excise Act applies uniformly, as evidenced by the Tribunal's decision in a related case. The duty payable was determined based on the actual manufacturing status of the goods.

4. Penalty imposition for non-submission of re-warehousing certificate:
Despite the duty payment by the appellant and the voluntary disclosure of the inability to sell goods, a penalty was initially imposed. However, considering the absence of malicious intent, prior payment, and post-facto approval by the Development Commissioner for DTA clearances, the penalty was deemed unjustified. The appeal was allowed, with the requirement to pay interest on the discharged duty amount if not already paid.

In conclusion, the judgment clarified the duty liability for goods manufactured by an EOU, emphasizing the uniform application of duty provisions and the importance of compliance with procedural requirements to avoid penalties.