2008 (1) TMI 782 - AT - Central Excise

Summary

Issues involved: Allegation of non-payment of Central Excise duty on steel rounds supplied between two appellants and subsequent supply to Railways without duty payment.

Summary:

1. The appellants, M/s. Frontier Alloy Steels Ltd. (FASL) and M/s. Frontier Springs Ltd. (FSL-2), were engaged in the manufacture and supply of spring steel rounds and coil/leaf springs, respectively. Allegations were made that FASL supplied steel rounds to FSL-2 without proper documentation and duty payment, leading to further supply to Railways without duty payment.

2. The appellants argued that FASL was approved by Railways for manufacturing steel rounds, and the steel rounds were purchased directly by FSL-2 from other suppliers with proper duty payment. They contended that no clandestine removal of goods occurred, and the demand pertained to a period when duty was being discharged under Section 3A of the Central Excise Act.

3. The Revenue contended that excess quantities of excisable goods were found at the factory premises without duty payment. They cited Railways inspection reports as evidence that steel rounds were supplied without duty payment, justifying the demand.

4. The Tribunal found that FSL-2 had purchased steel rounds from other manufacturers with duty payment and availed credit for the same. Since no investigation was conducted on these purchases, and no allegations were made against FSL-2 for clearing goods without duty payment, the demand on FASL was deemed unsustainable. The penalties imposed were set aside, and the appeals were allowed.

(Separate Judgment by Judges S/Shri S.S. Kang, T.K. Jayaraman, JJ.)