2011 (4) TMI 607 - AT - Central Excise

Demand and interest - Section 11A(2) read with Section 11AB - Old scrap insulators - Revenue contended that the goods cleared were akin to insulators manufactured and cleared on payment of duty - The reliance placed by the assessees on the certificate given by their purchasers is misplaced as the certificate has been furnished subsequent to the impugned order and the assessees could have requested the purchaser to issue certificate as required by them - The plea of bona fide belief that what they were clearing was scrap was not acceptable in view of the finding on the nature of the goods, namely that they are not scrap - Decided against the assessee.

Summary

Issues:
Demand of duty on old scrap insulators, imposition of penalty under Section 11AC of the Central Excise Act, reliance on purchaser's certificate, nature of goods cleared.

Analysis:
The case involved a demand of duty and education cess on old scrap insulators cleared by the assessees to a purchaser. The demand was based on the contention that the goods cleared were similar to insulators manufactured and cleared on payment of duty by the assessees. Additionally, penalties were imposed on the assessees under Section 11AC of the Central Excise Act and Central Excise Rules.

During the hearing, it was noted that the goods were described as "old scrap insulators" in the invoice. However, the Revenue argued that the goods were cleared on a piece basis with a specific rate per piece, which is not typical for scrap sales usually based on weight. This led to the conclusion that the cleared items were old disc insulators subject to duty. The assessees' reliance on a certificate from the purchaser, issued after the impugned order, was deemed irrelevant as they could have obtained the certificate before the clearance. The plea of a bona fide belief that the goods were scrap was dismissed due to the nature of the goods being determined as not scrap.

Ultimately, the judge upheld the impugned order and rejected the appeal, emphasizing the findings on the nature of the goods and the clearance basis. The decision highlighted the importance of accurately determining the nature of goods cleared to avoid duty evasion and penalties under relevant excise laws and rules.