2009 (9) TMI 861 - AT - Central Excise

Summary

Issues involved: Interpretation of Central Excise Rules regarding duty liability on job work basis for manufacturing plastic jerry cans supplied to principal manufacturer for packing oils, application of limitation period u/s 11A of CEA 1944, imposition of penalty u/r 25 of CER 2002.

Interpretation of Central Excise Rules:
The case involved the manufacture of plastic jerry cans on job work basis supplied by the principal manufacturer for packing oils. The demand was raised on the ground that these cans were used for packing oils exempted from duty. The respondents relied on Board Circular No. 306/22/97-CX, which clarified that duty liability rests with the manufacturer when cenvat is availed on inputs used for job work under Rule 57F(4) of Central Excise Rules, 1944. The Commissioner (Appeals) granted relief based on limitation, confirming demand only for a period within the limitation period.

Application of Limitation Period u/s 11A of CEA 1944:
The Commissioner (Appeals) found the demand for the period up to December 2005 as time-barred, as the records were audited in 2006 and the department could not invoke the extended period under proviso to Section 11A of CEA 1944. The demand for the period prior to March 2007 was held to be time-barred, with duty liability imposed only for clearances made in March 2007. No suppression was invoked, hence penalty under Section 11AC was not imposed, but penalty u/r 25 of CER 2002 was imposed for contravention of rules.

Imposition of Penalty u/r 25 of CER 2002:
The Revenue contended that the benefit of Notification No. 214/86-Central Excise was not available as the end product was exempted, and longer period was available due to non-disclosure in challans. However, the Tribunal found no merit in Revenue's view, noting that the respondents were not expected to know the end use of the cans by the principal manufacturer. As there was no specific allegation of suppression or intent to evade duty, the benefit of limitation was rightly extended by the Commissioner (Appeals), leading to the rejection of Revenue's appeal.

Separate Judgement:
No separate judgment was delivered by the judges in this case.