2008 (12) TMI 589 - AT - Central Excise

Summary

Issues:
1. Duty demand under Section 11A of the Central Excise Act and penalty under Rule 25 of the Central Excise Rules, 2002.
2. Applicability of Rule 12B of the Central Excise Rules, 2002.
3. Claim of exemption under Notification No. 34/2003-CE.

Analysis:

1. The appeal sought to vacate a duty demand of Rs. 80,503 and a penalty of Rs. 10,000 imposed on M/s. Sree Vadivambigai Exports for clearing cotton knitted garments without payment of duty. The appellants used the brand name of the principal manufacturer who discharged the duty on the goods. The lower authorities rejected the appellants' claim under Rule 12B of Central Excise Rules and Notification No. 34/2003-CE. The Commissioner (Appeals) held that as manufacturers, the duty liability rested with the appellants, leading to the demand of duty, interest, and penalty.

2. Rule 12B of the Central Excise Rules, 2002 allowed manufacturers of excisable goods like readymade garments to clear goods on job work basis without payment of duty if the recipient undertakes duty payment and statutory formalities. In this case, the duty on the goods was discharged by the recipient, not fully covered by Rule 12B. The judge found no duty liability on the appellants, as the duty had already been paid by the recipient. Therefore, demanding duty again on the same goods was deemed unsustainable, leading to the setting aside of the impugned order and allowing the appeal.

3. The claim of exemption under Notification No. 34/2003-CE was not accepted by the lower authorities. However, the judgment primarily focused on the applicability of Rule 12B and the discharge of duty by the recipient, leading to the decision in favor of the appellants. The judgment emphasized the specific provisions of Rule 12B and the absence of duty liability on the appellants due to the duty payment by the recipient, ultimately resulting in the appeal being allowed and the impugned order being set aside.