2013 (8) TMI 610 - AT - Central Excise

Evasion of Duty - Revenue was of the view that the assesse manufactured and supplied the components/parts of Railway wagon without payment of duty to different units of Indian Railways showing the said goods as trading items in their books of accounts and thereby indulged in evading the Central Excise duty involved thereon - Held that - The applicant company could not make out a prima facie case in their favor - The Adjudicating authority had discussed in details the evidences to hold the Assesse as manufacturer - wherever the claim of procurement of goods from traders and job workers had been made by the Assesse a fact contrary to the tenders/purchase orders, it was their duty to satisfy by adducing sufficient evidences before the Authorities in support of their claims. They did not discharge any duty before clearing the said goods to Railways - all tenders/purchase orders of different units of Railways have been accepted and executed by the assesse company representing themselves as manufacturer - before the goods were finally cleared to Railways, the assesse company used to inscribe AEW which is their trade name along with manufacturing date - the necessary testing which is the pre-requisite for supply of the goods to Railway was done at the factory premises of the assesse - the job workers admitted that goods supplied to the assesse were in semi-finished goods and the same were processed and inspected for quality control at the premises of the assesse. Waiver of Pre-deposit and Penalty - Assesse failed to make out a prima- facie case for total waiver of pre-deposit of duty and penalty the principles of law governing the exercise of discretion in disposing of the applications filed under Section 35(F) and also the interest of Revenue in line and the justice - 70 Lakhs were ordered to be submitted as pre-deposit upon such submission rest of the deposit to be stayed till the disposal stay granted.

Summary

Issues:
Two separate applications for waiver of pre-deposit of duty, interest, and penalties under the Central Excise Act, 1944.

Analysis:
1. The case involves allegations of evasion of Central Excise duty by the applicant company during 2004-05 to 2008-09 by supplying components/parts of Railway wagons without payment of duty to Indian Railways. The company claimed to be a manufacturer registered with NSIC and RDSO, procuring tenders/orders from Railways. Investigations revealed that job workers processed materials supplied by the company, with final processing and inspection done at the company's premises. The company contended they were not the manufacturers of the goods in question.

2. The company's advocate argued that due to labor unrest, the company outsourced orders to job workers for manufacturing Railway components. The advocate cited a previous case where a similar issue was dropped by the adjudicating authority, supporting the claim that the company was not the manufacturer. The Revenue's representative, however, presented evidence indicating the company's involvement in supplying designs and specifications to job workers, arranging finances, and inscribing their trade name on products.

3. After hearing both sides, the Tribunal found that the company supplied goods to Railways without discharging duty, representing themselves as manufacturers. The company's claim of outsourcing goods from job workers was not substantiated with evidence. The Tribunal noted that all tenders were accepted and executed by the company as a manufacturer, with necessary testing done at their premises. The investigation revealed discrepancies in the job workers' existence and the processing of goods at the company's premises.

4. Referring to a previous Tribunal order, the Tribunal emphasized the company's duty to provide sufficient evidence supporting their claims of procuring goods from traders and job workers. Considering the financial status of the company, the Tribunal directed the company to deposit a specified amount within a set timeframe, with the balance amount waived against the company and the partner. The decision was made based on legal principles, the interest of Revenue, and the overall justice in the case.