2008 (7) TMI 822 - AT - Central Excise

Summary

Issues:
1. Liability to pay duty on waste and scrap generated at job worker's premises.
2. Confusion regarding the payment of duty under Rule 57F of Central Excise Rules, 1944.
3. Applicability of penalty under Section 11AC of Central Excise Act, 1944.

Analysis:

Issue 1: Liability to pay duty on waste and scrap generated at job worker's premises
The case involved a manufacturer engaged in the production of Motor Vehicles who sent inputs/partially processed goods to job workers under Rule 57F of the erstwhile Central Excise Rules, 1944. The job worker returned the processing material, but the scrap generated was not returned. The Central Excise Officers detected this and demanded duty on the waste and scrap. The manufacturer paid the duty before the show cause notice was issued. The Adjudicating Authority confirmed the duty demand, which was upheld by the Commissioner (Appeals).

Issue 2: Confusion regarding the payment of duty under Rule 57F
The appellant's advocate argued that there was confusion regarding the duty payment on waste and scrap generated at the job worker's premises, citing a Tribunal decision in a similar case. The advocate contended that the demand of duty was not sustainable as the manufacturer had already deposited the duty before the show cause notice. However, the advocate argued that the penalty imposed under Section 11AC of the Act was unjustified.

Issue 3: Applicability of penalty under Section 11AC
The Departmental Representative reiterated the Commissioner (Appeals)'s findings, stating that since the job worker was unregistered, the manufacturer was liable to pay the duty. Upon review, the Tribunal noted that the goods were cleared under Rule 57F, and there was indeed confusion regarding the duty payment. The Tribunal found that the appellant had deposited the duty before the show cause notice and that there was no evidence of suppression of facts to evade duty payment. Consequently, the Tribunal held that the penalty under Section 11AC was not sustainable and set it aside, disposing of the appeal accordingly.

This judgment clarifies the liability of a manufacturer for duty on waste and scrap generated at a job worker's premises, addresses confusion regarding duty payment under Rule 57F, and determines the unjustifiability of a penalty under Section 11AC in the given circumstances.