2009 (10) TMI 725 - AT - Central Excise

Summary

Issues:
Demand of duty, interest, and penalty on supply of 'bottom rail' for Material-Handling Machinery to Bharat Heavy Electricals Limited (BHEL) after procuring material from an unregistered dealer. Appellant took Cenvat credit of duty paid, sold material as scrap to M/s. M.P. Corporation, and faced demand, interest, and penalty under Central Excise Act.

Analysis:
The appellant contested the demand of duty, interest, and penalty on the supply of 'bottom rail' for Material-Handling Machinery to BHEL, arguing that it was a trading activity not falling under the Central Excise Act. The appellant relied on the principle of natural justice and fairness, citing the Supreme Court's judgment in Hawkins Cookers Ltd. v. Collector, 1997 (96) E.L.T. 507 (S.C.). The appellant claimed equitable relief, challenging the sustainability of the demand.

The authorities confirmed the demand, interest, and penalty, which the appellant contested through an appeal. The appellant's argument that the supply to BHEL was not excisable and thus not liable for duty was countered by the authorities, citing the Tribunal's decision in Gurjar Gravures Pvt. Ltd. v. Commissioner of Central Excise, 2007 (220) E.L.T. 522 (Tri. - Ahmd.).

The Tribunal found that the appellant, after taking Cenvat credit on the duty paid for the rejected material, cleared it as scrap to a dealer, contrary to utilizing it for manufacturing excisable goods. The Tribunal noted that the appellant's current arguments contradicted their past actions and were untimely. The Tribunal upheld the demand of differential duty under Rule 16(2) of the Central Excise Rules, as the appellant had paid a lesser amount based on transaction value.

The Tribunal observed that crucial facts were suppressed by the appellant in their ER-1 return, establishing a link between the invoice issued to the scrap dealer and Rule 16 of the Central Excise Rules, 2002. The extended period of limitation was rightly invoked due to this suppression. Consequently, the appellant was held liable to pay the differential duty with interest and sustain the penalty for suppressing crucial facts.

In conclusion, the Tribunal upheld the demand of duty, interest, and penalty, dismissing the appellant's arguments and disposing of the appeal accordingly.