2014 (11) TMI 305 - AT - Central Excise

Denial of exemption from duty - Removal of goods from factory - Assessee claims that it is not a manufacturer - Held that - Commissioner(Appeals) has denied the benefit of treatment of the bought out items valued for exclusion on the ground that the documents were not submitted before the original authority at the time of adjudication of the case. there is no evidence to show that appellants have manufactured those items or they were received by the appellants. on the bought out items, excise duty had already been paid and therefore question of payment of excise duty again does not arise. It was pointed out by referring to the show-cause notice that the allegation in the show-cause notice is limited to wrongful availment of Notification No.6/2003-Cus. and nowhere there was an allegation that bought out items were integral part of PLC manufactured and supplied to BTPL. - Matter remanded back - Decided in favour of assessee.

Summary

Issues involved:
1. Exemption claimed on bought out parts
2. Denial of exemption and duty demand

Analysis:
Issue 1: Exemption claimed on bought out parts
The appellant, engaged in manufacturing programmable logic controllers (PLC), argued that during the relevant period, they supplied PLC systems along with bought out materials from third-party vendors. The bought out items were directly supplied to customers by the vendors through in-transit sales, without coming to the appellant's factory. The appellant contended that these transactions were properly reflected in their accounts and sales tax returns. However, proceedings were initiated to deny the exemption claimed by the appellants on the bought out parts, leading to a duty demand of over Rs. 19 lakhs. The Commissioner(Appeals) had denied the benefit of exclusion of bought out items, stating that necessary documents were not submitted during the adjudication. The appellants argued that excise duty had already been paid on the bought out items by the vendors, and there was no evidence to show that the appellants had manufactured or received these items. The Tribunal found merit in the appellant's arguments and decided to remand the matter to the original adjudicating authority for a detailed reconsideration. The Tribunal directed the authority to thoroughly review all submissions and make a conclusion in accordance with the law, without refunding the duty already deposited by the appellants.

Issue 2: Denial of exemption and duty demand
The show-cause notice alleged wrongful availment of a specific customs notification but did not claim that the bought out items were integral parts of the PLCs supplied. The Tribunal noted that in transactions where the appellant was not the manufacturer and goods were not removed from their factory, no excise duty had been discharged. The denial of exemption and the subsequent duty demand were based on the premise that the value of bought out parts should be included. However, the Tribunal, after considering the arguments and records, decided to set aside the impugned order and remand the matter for detailed reconsideration. The Tribunal emphasized that the original adjudicating authority should thoroughly assess all submissions and reach a conclusion within the legal framework. The duty already deposited by the appellants was not to be refunded during this process. The Tribunal's decision aimed to ensure a comprehensive review of the case to determine the applicability of the exemption and the duty demand on bought out parts.