2010 (6) TMI 340 - AT - Central Excise

Job worker - department is demanding duty on goods manufacture and cleared without payment of NCCD - respondent had discharged NCCD liability in respect of their own clearances - but failed to do so when cleared to the job worker - they were under the impression that they were eligible for the exemption - appellant was not eligible for exemption since exemption was available only to the job worker under Notification No. 214/86 and not to the principal manufacture Held that - justification provided by the respondent regarding their bona fide belief is not acceptable - respondent was paying NCCD goods cleared by them and they were also able to produce proof of payment of NCCD by other two manufacturers for whom they had manufactured goods on job work basis, the claim of bona fide belief in respect of clearances to job worker seems to be justified. Therefore accordingly we have to set aside the invocation of extended period and penalty under Section 11AC imposed on the respondent.

Summary

Issues:
1. Non-payment of National Calamity Contingent Duty (NCCD) on clearances made by the respondent.
2. Discharge of duty liability on goods cleared to job workers.
3. Invocation of extended period for the demand of duty.
4. Imposition of penalty on the respondent and the Manager (Commercial).

Analysis:

1. The respondent, engaged in manufacturing various products falling under specific chapters of the Central Excise Tariff Act, failed to determine and pay NCCD on certain clearances, leading to a show cause notice for recovery of NCCD along with interest and penalty. The Assistant Commissioner confirmed the NCCD, interest, and imposed penalties. On appeal, the Commissioner (Appeals) set aside the demand and penalties, prompting the Revenue to appeal against this decision.

2. The Revenue argued that the respondent failed to discharge NCCD liability on goods cleared to job workers, despite paying NCCD on their own clearances. The Tribunal found merit in the Revenue's appeal, stating that in the absence of evidence showing NCCD payment on goods used in manufacturing, the respondent was liable to discharge NCCD on goods cleared to job workers.

3. Regarding the invocation of the extended period for demanding duty, the respondent claimed a bona fide belief that they were exempt under a specific notification. The Tribunal noted that the respondent paid NCCD on goods cleared by them and produced proof of NCCD payment by other manufacturers, justifying their belief. Consequently, the extended period invocation and penalty under Section 11AC were set aside.

4. The penalty imposed on the Manager (Commercial) was addressed after setting aside the penalty on the respondent. As the penalty under Section 11AC was overturned, the question of imposing a penalty on the manager did not arise. The appeal by the Revenue was upheld on merits, restricting the demand to the normal period and remanding the matter for quantifying the demand within the normal limitation period, with applicable interest.

In conclusion, the judgment highlighted the importance of discharging duty liabilities on goods cleared to job workers, the justification for invoking the extended period, and the appropriate imposition of penalties based on the circumstances of the case.