2008 (7) TMI 645 - AT - Central Excise

Summary

Issues:
1. Benefit of Notification No. 214/86-C.E. denied due to procedural non-compliance.
2. Imposition of duty and penalty on the party by the department.
3. Appeal against the decision of the lower appellate authority.

Analysis:

1. The appeal involved a situation where the department sought to deny the benefit of Notification No. 214/86-C.E. to the respondents due to procedural non-compliance. The respondents had manufactured excisable goods on a job work basis using raw materials supplied by another company. The department alleged that the respondents did not follow the procedure under Rule 57F(2)/(3) of the Central Excise Rules, 1944. A show-cause notice was issued, and the original authority confirmed the duty demand against the party and imposed a penalty. However, the appellate authority held that minor procedural defects should not lead to the denial of benefits under the Notification.

2. The department had imposed a penalty of Rs. 5,000 on the party under Rule 173Q of the Central Excise Rules, 1944 but did not impose any penalty under Section 11AC of the Act. Both the party and the department filed appeals with the Commissioner (Appeals). The appellate authority ruled that the job worker should not be subjected to duty for procedural non-compliance as long as the job-worked goods were used in the manufacture of final products cleared on payment of duty. Consequently, the party's appeal was allowed, and the department's appeal was dismissed.

3. The appellant department contested the decision of the lower appellate authority, arguing that the procedural formalities under the Notification were not met by the respondents. However, the Tribunal found that the job worker and the principal manufacturer fulfilled the requirements of the Notification, and the final products were cleared on payment of duty. The Tribunal agreed with the decision of the ld. Commissioner (Appeals) that minor procedural defects should not result in the denial of benefits under the Notification. Therefore, the demand of duty and the imposition of penalties on the respondents were not justified, and the appeal was dismissed.

This detailed analysis of the judgment highlights the key issues, the arguments presented by the parties, and the Tribunal's reasoning in arriving at its decision to dismiss the appeal.