2014 (1) TMI 1711 - AT - Central Excise

Benefit of Notification No. 67/95 denied - Denial of remission of duty - extended period of limitation - Held that - As in the show cause notice there is no indication of denial of remission but simply a demand for duty. It is not indicated as to how the goods have to be treated as removed from the factory. Secondly in the present Central Excise Rules when duty paid goods are received back into the factory and the process amounts to manufacture, Cenvat credit can be availed and such credit can be utilized for payment of duty on the goods which are manufactured after reprocessing. In the case of piston, once they are melted, in the normal process pistons would be manufactured again and such manufactured piston would be cleared. Therefore in terms of Rule 16 also even if the pistons were taken back for processing after removal the appellants would be perfectly well within his rights to take back the credit of duty paid by the assessee at the time of removal and utilise the same for payment of duty on the finished goods. Therefore there is considerable force in the argument advanced by the learned counsel that the benefit of Notification No. 67/95 would be available in this case. Thus the situation here is comparable to the provisions of Rule 16 and since the goods have not been removed on payment of duty, benefit of Notification No. 67/95 would be applicable. Under these circumstances, the extended period for demanding duty should not have been invoked at all in view of the fact that there can be two views on the statutory provisions themselves as discussed above. When there is a question of interpretation, extended period would not have been invoked. On merits also, find no case for demanding the duty, interest and imposition of penalty - Decided in favour of assessee

Summary

Issues involved:
1. Duty liability on piston rings found not marketable and unfit for use.
2. Application of Rule 21 for remission and imposition of penalty under Section 11AC of Central Excise Act, 1944 and Rule 25 of Central Excise Rules, 2002.
3. Intimation by the appellant to the department regarding goods for recycling.
4. Claim of exemption from payment of duty under Notification No. 67/95.

Analysis:
1. The appellant informed the department about piston rings found not marketable and unfit for use, which they intended to recycle. The department issued a show cause notice demanding duty payment, arguing that the appellant did not wait for permission before recycling the goods. Penalty was also imposed under Section 11AC of Central Excise Act, 1944 and Rule 25 of Central Excise Rules, 2002.

2. The appellant's counsel contended that the appellant's intimation showed no intention to evade duty, and even though there was no legal obligation to inform, they did so voluntarily. The counsel argued that the goods were taken back for remanufacture within the factory, making them eligible for exemption from duty under Notification No. 67/95. The counsel also highlighted the delay in granting permission by the department as per Board's instructions.

3. The department argued that without permission under Rule 21 of Central Excise Rules, the appellant was liable to pay duty, and mere intimation without waiting for specific permission would amount to a contravention of the rule.

4. The judge analyzed the submissions and found that the claim by the manufacturer that the goods were not marketable was sufficient under Rule 21 for remission of duty. The judge noted that the department did not indicate denial of remission in the show cause notice but simply demanded duty. The judge also explained that under Rule 16, when duty-paid goods are received back into the factory for reprocessing, Cenvat credit can be availed and used for payment of duty on finished goods. Therefore, the benefit of Notification No. 67/95 would be applicable in this case. The judge concluded that there was no case for demanding duty, interest, or imposing a penalty, and allowed the appeal with consequential relief to the appellant.