2010 (8) TMI 803 - AT - Central Excise

Summary

Issues involved: Central Excise duty liability on clearance of dies from different manufacturing sheds.

Summary:

First Issue - Observations by Audit Officers:
The Audit Officers visited the factory of the appellants and observed that the appellants were manufacturing "Dies" at one manufacturing unit and using some of the dies in the process of manufacturing at other units owned by the appellants. The dies were transferred to customers and charges for making dies were recovered from them. The appellants were issued a show cause notice proposing recovery of Central Excise duty on the clearance of dies from one shed, involving a duty amount of Rs. 4,70,880.

Second Issue - Commissioner (Appeals) Decision:
In the first round of litigation, the matter was remanded to the original adjudicating authority to ascertain the actual movement of dies from one unit to another. In the second round, the Commissioner (Appeals) held the appellants liable to pay the duty and upheld the penalty imposed on them.

Third Issue - Appellant's Submission and Lower Authorities' Views:
The appellant argued that the original adjudicating authority went beyond the terms of the remand order by concluding that the appellants had cleared the dies without paying Central Excise duty. The appellant highlighted that the dies were shown as sold to customers but were actually used by the manufacturer in the casting process. The lower authorities maintained their findings.

Fourth Issue - Tribunal's Decision:
The Tribunal noted that the show cause notice alleged that the appellants transferred the title of the dies to customers but did not pay duty until cleared to customers. The Tribunal found that the demand for duty was based on the removal of dies from one place to another, not on sale. As there was no evidence of actual removal of dies, the demand for duty could not be sustained. Therefore, the appeal was allowed.

Conclusion:
The Tribunal held that the impugned order went beyond the proposal in the show cause notice, and in the absence of evidence showing the removal of dies from one manufacturing shed to others, the demand for duty was not sustainable.